Calculate the payback period in years for Project C. Round your answer to two decimal places.

Project D has a payback period of 3.35 years. The investor uses a threshold of 3.5 years for decision making. If Project C and Project D are mutually exclusive projects, which project should be accepted using the payback period method? Provide your reasons.

Project C has the following cash flows. 4 Years Cashflows 0 -$75,000 1 $13,000 2 $19,000 3 $22,000 5 $26,000 $25,000