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 9 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 –$5,200 $1,250 $2,450 $1,650 $1,570 $1,450 $1,250
Use the payback decision rule to evaluate this project. (Round your answer to 2 decimal places.)
Payback
years