Bluefield Inc. is considering a project that will require an initial investment of $20,000 and is expected to generate future cash flows of $5,000 for years 1 through 3 and $2,500 for years 4 through 6. The project’s payback period is: A.6 yearsB.5 yearsC.4 yearsD.67 years **Present Value of a Single Sum**| | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 ||---|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|| 5% | 0.952 | 0.907 | 0.864 | 0.823 | 0.784 | 0.746 | 0.711 | 0.677 | 0.645 | 0.614 || 10% | 0.909 | 0.826 | 0.751 | 0.683 | 0.621 | 0.564 | 0.513 | 0.467 | 0.424 | 0.386 || 15% | 0.870 | 0.756 | 0.658 | 0.572 | 0.497 | 0.432 | 0.376 | 0.327 | 0.284 | 0.247 |**PV of an Annuity**| | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 ||---|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|| 5% | 0.952 | 1.859 | 2.723 | 3.546 | 4.329 | 5.076 | 5.786 | 6.463 | 7.108 | 7.722 || 10% | 0.909 | 1.736 | 2.487 | 3.170 | 3.791 | 4.355 | 4.868 | 5.335 | 5.759 | 6.145 || 15% | 0.870 | 1.626 | 2.283 | 2.855 | 3.352 | 3.784 | 4.160 | 4.487 | 4.772 | 5.019 |**Explanation:**The tables provide values for calculating the present value of a single sum and an ann

Payback period is the time required to recover the investment.

Answered: Bluefield Inc. is considering a project…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bluefield Inc. is considering a project that will require an initial investment of $20,000 and is expected to generate future cash flows of $5,000 for years 1 through 3 and $2,500 for years 4 through 6. The project’s payback period is:

A.	6 years
B.	5 years
C.	4 years
D.	67 years

**Present Value of a Single Sum**

| | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
|---|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|
| 5% | 0.952 | 0.907 | 0.864 | 0.823 | 0.784 | 0.746 | 0.711 | 0.677 | 0.645 | 0.614 |
| 10% | 0.909 | 0.826 | 0.751 | 0.683 | 0.621 | 0.564 | 0.513 | 0.467 | 0.424 | 0.386 |
| 15% | 0.870 | 0.756 | 0.658 | 0.572 | 0.497 | 0.432 | 0.376 | 0.327 | 0.284 | 0.247 |

**PV of an Annuity**

| | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
|---|-------|-------|-------|-------|-------|-------|-------|-------|-------|-------|
| 5% | 0.952 | 1.859 | 2.723 | 3.546 | 4.329 | 5.076 | 5.786 | 6.463 | 7.108 | 7.722 |
| 10% | 0.909 | 1.736 | 2.487 | 3.170 | 3.791 | 4.355 | 4.868 | 5.335 | 5.759 | 6.145 |
| 15% | 0.870 | 1.626 | 2.283 | 2.855 | 3.352 | 3.784 | 4.160 | 4.487 | 4.772 | 5.019 |

**Explanation:**

The tables provide values for calculating the present value of a single sum and an ann

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