Delta Pic is considering investing in bespoke software solutions, which requires an initial investment of $130,000.$ The annual cash inflows during years $1-3$ are expected to be $38,000$ for year $1$; $43,000$ for year $2$ and $50,000$ for year $3.$ The company's money cost of capital is $6\%$ and inflation is expected to be $3\%$ during the life of the project.

Required:

a$)$ Calculate the ARR of the project, taking inflation into account.

b$)$ Calculate the $($undiscounted$)$ Payback Period of the project, taking inflation into account.

c$)$ Calculate the NPV of the project using the money cost of capital as the discount rate, and state clearly whether the project should be undertaken by the company.

d$)$ Calculate the NPV of the project using the real rate of return as the discount rate $($round up to $2$ decimal places$),$ and state clearly whether the project should be undertaken by the company.

e$)$ Discuss the likely impact of your outcomes in parts c$)$ and d$)$ above on Delta Plc