Suppose your firm is considering investing in a project with the cash flows shown as follows, 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 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?

0 2 3 4 5 6 Time Cash Flow -$5,000 $1,300 $1,400 $1,600 $1,600 $1,100 $2,000