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 2.5 and 3.5 years, respectively.

Time: 0 1 2 3 4 5 6

Cash flow:$4,800 $1,180 $2,380 $1,580 $1,580 $1,380 $1,180

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

PAYBACK _________ YEARS

Should it be accepted or rejected?

• accepted

• rejected