Suppose your firm is considering investing in a project with a cash flows shown as follows, that required rate of return on projects of this risk class 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half four and a half years, respectively. Use the payback decision to evaluate this project, should it be accepted or rejected? What is the payback period?

Cash Flow

0 -5000

1. 1,300

2. 1,400

3. 1,600

4. 1,600

5. 1,100

6. 2,000