Question: The Short - Line Railroad is considering a $ 1 3 5 , 0 0 0 investment in either of two companies. The cash flows

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
215,00035,000
335,00085,000
41020,00020,000
a. Calculate the payback period for the investment in Electric Co. and Water Works.
Payback period
Investment A
years
Investment B
years
b. Which of the alternatives would you select under the payback method?
multiple choice
Electric Co.
Water Works
Both

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