Use the information below to answer the remaining questions: Steve is considering adding tools to his auto body shop. He estimates that the cost of inventory will be $3,500. The remodeling expenses and shelving costs are estimated at $2,400. Tool sales are expected to produce net cash inflows of $2,800, $2,600, and $2,600 over the next three years, respectively. Should Steve add tools to his store if he assigns a two-year payback period to this project? Why or why not?

The total cost of the project is:

Group of answer choices

$5,900

$5,400

$3,500

$2,400

The project should be:

Group of answer choices

Rejected: The payback period is 2.93 years

Rejected: The payback period is 2.19 years

Accepted: The payback period is 1.88 years

Accepted: The payback period is 2.93 years

A project has an initial cost of $18,400 and expected cash inflows of $7,200, $8,900, and $7,500 over Years 1 to 3, respectively. What is the discounted payback period if the required rate of return is 11.2 percent?

Group of answer choices

2.31 years

2.45 years

2.55 years

2.87 years

Never