I just want to know if the last part is correct or not

Requirements

1. Compute the payback, the ARR, the NPV, the IRR, and the profitability index of this investment.

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

Requirement 1. Compute the payback, the ARR, the NPV, the IRR, and the profitability index of this investment.

First, determine the formula and calculate payback. (Round your answer to one decimal place, X.X.)

Amount invested	/	Expected annual net cash inflow	=	Payback
$1,950,000	/	$483,000	=	4.0	years

Next, determine the formula and calculate the accounting rate of return (ARR). (Round the percentage to the nearest tenth percent, X.X%.)

Average annual operating income	/	Average amount invested	=	ARR
$239,250	/	$975,000	=	24.5	%

Calculate the net present value (NPV). (Enter any factor amounts to three decimal places, X.XXX.)

		Net Cash	Annuity PV Factor	Present
Years		Inflow	(i=12%, n=8)	Value
1 - 8	Present value of annuity	$483,000	4.968	$2,399,544
0	Investment			(1,950,000)
	Net present value of the investment			$449,544

The IRR (internal rate of return) is between

18-20%

.

Finally, determine the formula and calculate the profitability index. (Round your answer to two decimal places, X.XX.)

Present value of net cash inflows	/	Initial investment	=	Profitability index
$2,399,544	/	$1,950,000	=	1.23

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

Recommendation:

Water CountryWater Country

should

invest in the project because the payback period is

greater than

the operating life, the NPV is

negative

, the profitability index is

less than

one, and the ARR and IRR are

greater than

the company's required rate of return.