Johnson & Johnson is evaluating a project that requires an initial investment of $500,000. The asset will be depreciated over five years at 20% per year. The cash flows from the project are as follows:

Year	Inflow ($)	Outflow ($)
Year 1	160,000	60,000
Year 2	170,000	65,000
Year 3	180,000	70,000
Year 4	190,000	75,000
Year 5	200,000	80,000

a. What is the payback period?
 b. Calculate the accounting rate of return (ARR) each year and the average.
 c. Assuming a cost of capital of 10%, what is the net present value (NPV) of the cash flows?
 d. Should Johnson & Johnson proceed with the project?