AJ Industries, Inc. is considering a four$-$year project that has an initial investment of $$800,000.$ The respective future cash inflows from this project for years $1,2,3,$ and $4$ are: $1$ $$400,000,2)$ $$320,000,3,$ and $4)160,000.$ AJ's cost of capital is $15\mathrm{.}5\%.$ What $\text{'}$is the project's payback period? If AJ's hurdle rate is $2\mathrm{.}5$ years, should they accept this project? Why or why not?

$2\mathrm{.}33$ years; yes, because payback $<mtext\; id="EditorElement\_448200"></mtext><mn\; id="EditorElement\_448201">2</mn><mn\; id="EditorElement\_448202">.</mn><mn\; id="EditorElement\_448203">5</mn>$ years.

$3\mathrm{.}33$ years; no$,$ because payback $>2\mathrm{.}5$ years.

$2\mathrm{.}10$ years; yes, because payback $<mn\; id="EditorElement\_447974">2</mn><mn\; id="EditorElement\_447975">.</mn><mn\; id="EditorElement\_447976">5</mn>$ years.

$2\mathrm{.}74$ years; no$,$ because payback $>2\mathrm{.}5$ years.

$2\mathrm{.}33$ years; no$,$ because payback $<mn\; id="EditorElement\_447862">2</mn><mn\; id="EditorElement\_447863">.</mn><mn\; id="EditorElement\_447864">5</mn>$ years.