A manufacturing company is considering whether to invest in a new production line. The company has estimated that the new production line will cost $2 million to install and will have a useful life of 5 years. After the 5 years, the production line is expected to have a salvage value of $200,000. The company estimates that the new production line will generate annual cash flows of $600,000 in the first year, which will increase by 10% each year for the next 4 years. The company uses a discount rate of 12% per year for all investments.

Should the company invest in the new production line?