The City of Industry parks department is considering the purchase of a new, more efficient pool heater for its Campbell Swimming Pool at a cost of $28,000. It should save $7,000 in cash operating costs per year. Its estimated useful life is 10 years, and it will have zero disposal value. Ignore taxes. 1 . What is the payback time? 2. Compute the NPV if the required rate of return is 10%. Should the department buy the heater? Why? 3. Using the ARR model, compute the rate of return on the initial investment.