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Average Rate of Return Method, Net Present Value Method, and Analysis for a service company The capital investment committeeEach project requires an investment of $380,000. Straight-line depreciation will be used, and no residual value is expected.Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Av

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Answer #1

1a Average investment in both the cases = $380,000 / 2 = $190,000

Average income in both the cases = $190,000 / 5 = $38,000

Average rate of return (front end ladder) = $38,000 / $190,000 = 20.0%

Average rate of return (greenhouse) = $38,000 / $190,000 = 20.0%

front end 1b greenhouse ladder $451,010 $476,684 present value of net cash flow $380,000 $71,010 $380,000 $96,684 amount to b

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