Problem 13-18 Discounted Payback (LG13-2)

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.

Time:	0	1	2	3	4	5	6
Cash flow	$5,200	$1,290	$2,490	$1,690	$1,690	$1,490	$1,290

Use the discounted payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)

Discounted payback

years

Should it be accepted or rejected?

	Rejected
	Accepted