Compute the Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 8 percent and the maximum allowable payback is 3 years.

Time:012345Cash flow:-2,000 300 650 900 725 500

rev: 12_06_2012

Multiple Choice

• 2.21 years, Reject
• 2.21 years, Accept
• 3.21 years, Reject
• 3.21 years, Accept