Training cost is $3,000 and a project required an initial investment of $12,000. If the project yields monthly savings of $1,800 beginning after 3 months, what is the payback period in months (before money costs and taxes)?
Do the math mini0616 posted below but Add 3 to 8.33 to get answer.. the key is After 3 months.. 3+8.33= 11.33 months to payoff. After 3 months it begins saving money. $15k initially invested plus 3 months of zero return plus 8.33 months of benefit equals 11.33 months to break even.
Initial Investment: $12,000
Training Cost: $3,000 (assuming this is part of the initial investment)
Monthly Savings: $1,800 (starting from the 4th month)
Total initial investment = $12,000 + $3,000 = $15,000
Each month, the project saves $1,800.
The payback period can be calculated as follows:
Payback Period = Total Initial Investment / Monthly Savings
Payback Period = $15,000 / $1,800 per month ≈ 8.33 months
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3 months, 4 weeks agomini0616
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