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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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