t18

The Short-Line Railroad is considering a $160,000 investment in either of two companies. The cash flows are as follows: Year 1 2 3 4 - 10 Electric Co. $ 95,000 25,000 40,000 20,000 Water Works $ 25,000 40,000 95,000 20,000 a. Compute the payback period for both companies. (Round your answers to 1 decimal place.) Electric Co. years Water Works years b. Which of the investments is superior from the information provided? Electric Co. Water Works