The Short-Line Railroad is considering a $140,000 investment in either of two companies. The cash flows are

Question:

The Short-Line Railroad is considering a $140,000 investment in either of two companies. The cash flows are as follows:

a. Using the payback method, what will the decision be?
b. Explain why the answer in part a can bemisleading.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Foundations of Financial Management

ISBN: 978-1259194078

15th edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

See More Books

Question Posted: Oct 14, 2014 06:54 AM

See More Questions

The ABC is considering a $100,000 investment in either of two companies. The cash flows are as follows: a. Using the payback method, what will the decision be? b. Explain why the answer in part a can...
The Short-Line Railroad is considering a $ 100000 investment in either of two companies. The cash flows are as follows: a. Using the payback method, what will the decision is? b. Explain why the...
The Short-Line Railroad is considering a $100,000 investment in either of two companies. The cash flows are as follows: a. Using the payback method, what decision should be made? b. Explain why the...
Abhishek Ltd. is manufacturing cotton clothes. It has been consistently earning good profits for many years. This year too, it has been able to generate enough profits. There is availability of...
Let fn be integrable on [0, 1] and fn f uniformly on [0, 1]. Show that if bn f 1 as n , then limo, fn(x) dx= 10 f(x) dx.
The State Oil Company of Azerbaijan Republic (SOCAR) is an integrated oil company headquartered in Baku, Azerbaijan, and has large operations in nearby regions. Historically, SOCAR did not spend a...
Apply ridge regression to the Hald cement data in Table B.21. a. Use the ridge trace to select an appropriate value of $k$. Is the final model a good one? b. How much inflation in the residual sum...
Powers Rental Service had the following items that require adjustment at year-end. a. Earned $6,420 of revenue from the rental of equipment for which the customer had not yet paid. b. Interest of...
Consider SELECT statements listed below. SELECT L_PARTKEY, L_TAX, COUNT(*) FROM LINEITEM GROUP BY L PARTKEY, L_TAX; SELECT O TOTALPRICE, COUNT(*) FROM ORDERS GROUP BY O TOTALPRICE; SELECT L_TAX,...
You are debating buying a junk bond with a CCC credit rating. The market should discount expected cash flows of this bond at 8%. The bond is a zero coupon bond with YTM (implied by its market price)...
Assume a $90,000 investment and the following cash flows for two alternatives. a. Calculate the payback for investment A and B. b. If the inflow in the fifth year for Investment A was $25,000,000...
X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows: a. Which of the two projects should be chosen based on the payback method? b. Which...
What is the auditors concern regarding a company that lacks a competent management team?
Your refrigerator uses $220 \mathrm{~W}$ when the compressor is running, and the compressor runs $30 \%$ of the time. How many $\mathrm{kWh}$ will your refrigerator use over the course of a...
What are the two types of hormones? How does each type of hormone produce an effect in a target cell?
Show that your blood supply can carry as many as 3 10 22 molecules of oxygen. Heres some information you may find useful: You have 25 trillion red blood cells. Each red blood cell contains 300...
Explain how hemoglobins oxygen affinity is affected by blood pH, and how this change in oxygen affinity is adaptive.
What is unusual about the process of meiosis that produces the egg?
Differentiate the expression with respect to x, assuming that y is implicitly a function of x. x 2 y 3
Prepare a stock card using the following information A company is registered for GST which it pays quarterly, assume GST was last paid on the 30th of June 2019. It uses weighted average cost...
Take a poll of friends, family, and work colleagues by asking them the foUowing three questions: a. Do you think that real estate is a safer investment than bonds? b. Do you think of your house as an...
You invest $3,000 for three years at 12 percent. a. What is the value of your investment after one year? Multiply $3,000 1.12. b. What is the value of your investment after two years? Multiply your...
What is the present value of: a. $7,900 in 10 years at 11 percent? b. $16,600 in 5 years at 9 percent? c. $26,000 in 14 years at 6 percent?
a. What is the present value of $140,000 to be received after 30 years with a 14 percent discount rate? b. Would the present value of the funds in part a be enough to buy a $2,900 concert ticket?
Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $138,000, and Keon transferred an acre of undeveloped land to...
The following information pertains to the inventory of Parvin Company: Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 400 units @ 2,400 units @ 1,100 units $17 $22 $23 During the year,...
Gold Nest Company of Guandong, China, makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their...

The Short-Line Railroad is considering a $140,000 investment in either of two companies. The cash flows are

Question:

Year Electric Co. $85,000 25,000 30,000 10,000 Water Works $30.000 25,000 85,000 10,000 4-10

Step by Step Answer:

ShortLine Railroad a Payback for Electric Co Payback for Water Works 140000 85...View the full answer

Foundations of Financial Management

Students also viewed these Corporate Finance questions