Question
The Short-Line Railroad is considering a $135,000 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 $135,000 investment in either of two companies. The cash flows are as follows: |
| Year | Electric Co. | Water Works | ||||
| 1 | $ | 85,000 | $ | 15,000 | ||
| 2 | 15,000 | 35,000 | ||||
| 3 | 35,000 | 85,000 | ||||
| 4 10 | 20,000 | 20,000 | ||||
| a. | Compute the payback period for both companies. (Round your answers to 1 decimal |
| Payback Period | ||
| Electric Co. | years | |
| Water Works | years | |
| b. | Which of the investments is superior from the information provided? | ||||
|
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Finance In America An Unfinished Story
Authors: Kevin R. Brine, Mary Poovey
1st Edition
022650204X, 978-0226502045
