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Training cost $6,500 and a project required an initial investment of $47,500. If the project yields monthly savings of $3,500 beginning after 4 months, what is the payback period in months, before money costs and taxes?
Suggested Answer: C
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33 comments · newest first
JE
Jennifer
10 months ago
Monthly savings start after 4 months, don’t forget that!
TU
Tula
10 months ago
Totally agree, 19.4 makes sense with the savings!
DE
Deane
10 months ago
Wait, how do we know it’s 19.4? Seems off.
JA
Jacklyn
11 months ago
Initial investment is $47,500, training cost $6,500.
HE
Heike
11 months ago
Payback period is around 19.4 months, right?
MI
Mica
11 months ago
I feel like the payback period should be straightforward, but I’m confused about how to handle the initial investment and the training cost together.
BE
Beatriz
11 months ago
If the project starts saving after 4 months, I guess we need to add those months to the total payback calculation. I’m leaning towards option C, but I’m not completely sure.
TA
Tawanna
11 months ago
I think we did a similar question where we had to subtract initial costs from savings, but I can't recall the exact formula for the payback period.
YO
Yoko
12 months ago
I remember we calculated payback periods in class, but I’m not sure how to factor in the delay of 4 months before savings start.
MA
Martin
12 months ago
I'm pretty confident I can solve this. The key is to remember that the payback period is the time it takes for the cumulative savings to equal the total investment. With the given information, I should be able to work through this step-by-step.
EM
Emelda
1 year ago
Wait, is the 4-month delay before the savings start included in the payback period, or do I need to add that on top of the calculated payback period? I'm a little confused about how to handle that part.
AZ
Azzie
1 year ago
Okay, I think I've got this. The total investment is $47,500 + $6,500 = $54,000. The monthly savings are $3,500, and the savings start after 4 months. So the payback period should be (54,000 / 3,500) + 4 = 19.4 months.
EL
Elenor
1 year ago
Hmm, I'm a bit unsure about how to handle the 4-month delay before the savings start. Do I need to account for that somehow in the calculation?
DA
Dana
1 year ago
This looks like a straightforward payback period calculation. I'll start by finding the total investment cost, then divide that by the monthly savings to get the payback period.
XU
Xuan
1 year ago
This is easy peasy. A) 9.7 months, no doubt about it. Now, where's the free coffee?
AI
Aileen
1 year ago
No way, it's definitely A) 9.7 months.
HE
Henriette
1 year ago
I think it's B) 15.4 months.
RO
Rodney
1 year ago
That makes sense, maybe we should reconsider our calculations
NA
Naomi
1 year ago
Payback period? More like 'pay-back-the-bank' period, am I right? Anyway, I say D) 23.7 months.
AL
Allene
1 year ago
Wait, is this a trick question? I'm going to go with B) 15.4 months just to be safe.
WI
William
1 year ago
No way, I calculated it and got A) 9.7 months.
LU
Luann
1 year ago
I think the answer is actually C) 19.4 months.
JA
Jacklyn
1 year ago
I think the answer is C) 19.4 because we need to consider the training cost as well
KI
Kimberely
1 year ago
Okay, let me crunch the numbers. I think C) 19.4 months is the right answer here.
AL
Allene
1 year ago
I agree with you, C) 19.4 seems to be the right choice
FR
Frederica
1 year ago
I think it might actually be B) 15.4
CH
Christiane
1 year ago
I believe the correct answer is A) 9.7
AD
Adelina
1 year ago
But if we calculate the payback period based on the initial investment and monthly savings, it should be around 9.7 months
HA
Hassie
1 year ago
Hmm, this seems straightforward. I'm going with A) 9.7 months.
SH
Sheron
1 year ago
I agree with you, I also calculated it to be B) 15.4 months.
SH
Sheron
1 year ago
I think it's actually B) 15.4 months.
RO
Rodney
1 year ago
I disagree, I believe the answer is B) 15.4
AD
Adelina
1 year ago
I think the answer is A) 9.7