Optima Ltd. plans to invest in a new product line that requires an initial investment of GBP 200,000. The following are the expected cash inflows:

• Year 1: GBP 40,000
• Year 2: GBP 50,000
• Year 3: GBP 70,000
• Year 4: GBP 80,000
• Year 5: GBP 60,000

Requirements:

1. Calculate the payback period for the investment.
2. Compute the Accounting Rate of Return (ARR) based on the average profit.
3. Determine the NPV of the project using a discount rate of 12%.
4. Calculate the Profitability Index (PI) for the project.
5. Should Optima Ltd. proceed with the investment? Provide a detailed explanation based on your calculations.