Required:1a. Compute the average rate of return for each investment. If required, round your answer to one decimalplace.Average Rate of ReturnFront-End LoaderGreenhouse1b. Compute the net present value for each investment. Use the present value of $1 table above. If required,round to the nearest dollar. If required, use the minus sign to indicate a negative net present value.Front-End LoaderGreenhousePresent value of net cash flowAmount to be investedNet present value2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the twoinvestments.The front-end loader has anet present value because cash flows occurintime compared to the greenhouse. Thus, if only one of the two projects can be accepted, thewould be the more attractive. Average Rate of Return Method, Net Present Value Method, and Analysis for a service companyThe capital investment committee of Arches Landscaping Company is considering two capital investments. Theestimated operating income and net cash flows from each investment are as follows:Front-End LoaderGreenhouseOperatingNet CashOperatingNet CashYearIncomeFlowIncomeFlow1$55,800$172,000$117,000$275,000255,800172,00089,000232,00055,800172,00045,000163,000455,800172,00020,000112,000555,800172,0008,00078,000Total$279,000$860,000$279,000$860,000Each project requires an investment of $620,000. Straight-line depreciation will be used, and no residual value isexpected. The committee has selected a rate of 12% for purposes of the net present value analysis.Present Value of $1 at Compound InterestYear6%10%12%15%20%10.9430.9090.8930.8700.83320.8900.8260.7970.7560.6940.8400.7510.7120.6580.57940.7920.6830.6360.5720.4820.7470.6210.5670.4970.4020.7050.5640.5070.4320.33570.6650.5130.4520.3760.27980.6270.4670.4040.3270.2330.5920.4240.3610.2840.194100.5580.3860.3220.2470.162Required:la. Compute the average rate of return for each investment. If required, round your answer to one decimalplace.

The data are given for two capital Investments. Required 1 (a) Average Rate of Return for both…

Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Front-End Loader Greenhouse 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Front-End Loader Greenhouse Present value of net cash flow Amount to be invested Net present value 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments. The front-end loader has a net present value because cash flows occur in time compared to the greenhouse. Thus, if only one of the two projects can be accepted, the would be the more attractive.

Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Front-End Loader Greenhouse 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. Front-End Loader Greenhouse Present value of net cash flow Amount to be invested Net present value 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments. The front-end loader has a net present value because cash flows occur in time compared to the greenhouse. Thus, if only one of the two projects can be accepted, the would be the more attractive.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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