The Short-Line Railroad is considering a $205,000 investment in either of two companies. The cash...
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Accounting
The Short-Line Railroad is considering a $205,000 investment in either of two companies. The cash flows are as follows:
| Year | Electric Company | Water Works |
|---|---|---|
| 1 | $ 100,000 | $ 45,000 |
| 2 | 45,000 | 60,000 |
| 3 | 60,000 | 100,000 |
| 4 to 10 | 30,000 | 30,000 |
Compute the payback period for both companies.
Note: Round your answers to 1 decimal place.
Which of the investments is superior from the information provided?
- multiple choice
Water Works
Electric Company
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