The Short-Line Railroad is considering a $200,000 investment in either of two companies. The cash flows are as follows:
Year Electric Co. Water Works 1 $ 100,000 $ 50,000 2 50,000 50,000 3 50,000 100,000 4 â 10 25,000 25,000
a. Compute the payback period for both companies. (Round your answers to 1 decimal place.)
Electric Co= ____years
Water Company= ____ years
The Short-Line Railroad is considering a $200,000 investment in either of two companies. The cash flows are as follows:
| Year | Electric Co. | Water Works | ||||
| 1 | $ | 100,000 | $ | 50,000 | ||
| 2 | 50,000 | 50,000 | ||||
| 3 | 50,000 | 100,000 | ||||
| 4 â 10 | 25,000 | 25,000 | ||||
a. Compute the payback period for both companies. (Round your answers to 1 decimal place.)
Electric Co= ____years
Water Company= ____ years
Related questions
The Short-Line Railroad is considering a $175,000 investment in either of two companies. The cash flows are as follows:
| Year | Electric Co. | Water Works | ||||
| 1 | $ | 80,000 | $ | 35,000 | ||
| 5 | 25,000 | 60,000 | ||||
| 3 | 70,000 | 80,000 | ||||
| 4 â 10 | 30,000 | 40,000 | ||||
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. |
| Assume a $300,000 investment and the following cash flows for two products: |
| Year | Product X | Product Y | ||||
| 1 | $ | 90,000 | $ | 100,000 | ||
| 2 | 100,000 | 100,000 | ||||
| 3 | 20,000 | 90,000 | ||||
| 4 | 50,000 | 50,000 | ||||
| a. | Calculate the payback for products X and Y. (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| Payback | ||
| Product X | years | |
| Product Y | years | |
| b. | Which alternative would you select under the payback method? | ||||
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