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The Short-Line Railroad is considering a $125,000 investment in either of two companies. The cash flows are as follows: Year Electric Co. Water Works 1

The Short-Line Railroad is considering a $125,000 investment in either of two companies. The cash flows are as follows:

Year Electric Co. Water Works
1 $ 90,000 $ 15,000
2 20,000 20,000
3 15,000 90,000
4 10 15,000 15,000

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?

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