Blue Jay Company is considering purchasing a new summer camp in the mountains of North Carolina for $$2,800,000.$ The new facility will generate annual net cash inflows of $$625,000$ for ten years. Specialists

estimate that the facility will remain useful for ten years and have no residual value. The company uses straight$-$line depreciation, and its stockholders demand an annual return of $11\%$ on investments of this

nature.

Requirement $1.$ Compute the payback, the ARR, the NPV$,$ the IRR, and the profitability index of this investment. $($Round the payback period to one decimal place, X$.$X$.$ Round the accounting rate of return to the

nearest hundredth percent, X$.$XX$\%.$ Round profitability index to two decimal places, X$.$XX$.)$

The payback period is

years.

The accounting rate of return $($ARR$)$ is

$\%.$

The net present value $($NPV$)$ is

The internal rate of return $($IRR$)$ is

$\%.$

The profitability index is

Requirement $2.$ Recommend whether the company should invest in this project.

Blue Jay

invest in the project because the payback period is

the operating life, the NPV is

is

the company's required rate of return.