You are evaluating an investment project costing $22,000 initially. The project will provide $3,000 in after-tax cash flows in the first year, $4,000 in the second year and $5,000 each year thereafter for 10 years. The maximum payback period for your company is 6 years.

Part 1

What is the payback period for this project?

Part 2

Should your company accept this project?

Yes

No