Microsoft is evaluating a $500,000 capital investment. The financial details are as follows: The initial investment is $500,000 with an annual depreciation rate of 10%, resulting in yearly depreciation of $50,000. The book values at the end of each year decrease progressively from $450,000 to $0 over ten years. The projected cash flows are $80,000 in the first year, increasing to $170,000 in the tenth year. The corresponding profits are $30,000, $40,000, and so on, leading to ARR percentages ranging from 6% to 24%. The average profits are $75,000, the average investment is $250,000, and the average ARR is 30%. The payback period is calculated to be 6.67 years, and the NPV at an 8% discount rate is $80,500.

Requirements:

1. Compute the ARR, payback period, and NPV.
2. Analyze the investment's profitability.
3. Make a recommendation on whether Microsoft should proceed with the investment.