The Short-Line Railroad is considering a $150,000 investment in either of two companies. The cash...
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The Short-Line Railroad is considering a $150,000 investment in either of two companies. The cash flows are as follows:
Year Electric Co. Water Works
1 $ 75,000 $ 30,000
2 30,000 45,000
3 45,000 75,000
4 10 15,000 15,000
a. Compute the payback period for both companies. (Round your answers to 1 decimal place.)
b. Which of the investments is superior from the information provided?
Water Works
Electric Co.
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