Sears is considering investing $40,000 in a project that promises $13,000 per year in after-tax cash inflows for 5 years. If the cost of capital is 16% per year and the company's president requires that all independent projects have a discounted payback period of 4-year or less, should the company invest in this project? What's the project's discounted payback period?

	1.	This project has a discounted payback period of 4.57 years. Since this number exceeds the target discounted payback period, the company should not invest.
	2.	This project has a discounted payback period of 3.08 years. Since this number is lower than the target discounted payback period, the company should invest.
	3.	This project has a discounted payback period of 4.57 years. Since this number exceeds the target discounted payback period, the company should invest.
	4.	This project has a discounted payback period of 3.08 years. Since this number is lower than the target discounted payback period, the company should not invest.