The Short-Line Railroad is considering a $150,000 investment in either of two companies. The cash flows are as follows:

Year Electric Co. Water Works

1 $ 75,000 $ 30,000

2 30,000 45,000

3 45,000 75,000

4 10 15,000 15,000

a. Compute the payback period for both companies. (Round your answers to 1 decimal place.)

b. Which of the investments is superior from the information provided?

Water Works

Electric Co.