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 7 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively.
Time: 0 1 2 3 4 5 6
Cash flow –$5,000 $1,270 $2,470 $1,670 $1,590 $1,470 $1,270
Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)
Payback years