MNO Ltd is planning to invest in a new technology. The details are as follows:

• Initial Cost: GBP 250,000
• Expected Life: 7 years
• Scrap Value: GBP 30,000
• Depreciation Method: Sum of the years' digits
• Discount Rate: 18%

Expected Cash Flows:

Year	Cash flow
1	60,000
2	70,000
3	80,000
4	50,000
5	40,000
6	30,000
7	20,000

a) Define and explain the concept of residual value.

b) Discuss the advantages and disadvantages of the sum of the years' digits method of depreciation.

c) Based on the provided data, calculate: i) Depreciation expense for each year. ii) Payback period. iii) NPV. iv) ARR. v) Recommend whether MNO Ltd should invest in this technology.