MNO Ltd. is considering an investment in a new software system costing JPY 15,000,000. The software is expected to be in use for 5 years with no residual value. Depreciation will be on a straight-line basis. The cost of capital is 10%. The estimated cash flows and profits are as follows:

Year	Cash Flow	Profit
1	¥3,000,000	¥1,000,000
2	¥4,000,000	¥1,500,000
3	¥5,000,000	¥2,000,000
4	¥6,000,000	¥2,500,000
5	¥7,000,000	¥3,000,000

Tasks: a) Identify and discuss the relevant costs in capital budgeting. b) Explain the differences between the payback period and accounting rate of return (ARR). c) Based on the given data, calculate: i) The payback period. ii) The NPV of the software system. iii) Advise MNO Ltd. on whether to invest in the software system.