Brian Patterson is considering investing in a project which requires an initial investment of 318,000. The project is expected to last for four years and has nil residual value at the end of it. The net operating cash flows for the four years of the project are expected to be: Year 1 Net cash flow 189,000 Year 2 Net cash flow ( 37,800) Year 3 Net cash flow 177,000 Year 4 Net cash flow 110,500 Required:

a) Calculate the payback period for the above project

b) Calculate the accounting rate of return (ARR) of the above project using the average annual return on average investment