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Training cost $2,500 and a project required an initial investment of $23,500. If the project yields monthly savings of $2,500 beginning after 4 months, what is the payback period in months (before money costs and taxes)?
Suggested Answer: B
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38 comments · newest first
LA
Latanya
11 months ago
I thought it would be shorter, honestly.
RE
Reena
11 months ago
Totally agree, 10.4 makes sense!
TW
Twana
11 months ago
Wait, how does it take that long?
DA
Daisy
12 months ago
Payback period is 10.4 months, right?
GE
Gearldine
12 months ago
The total investment is $26,000.
MI
Mi
12 months ago
I’m a bit lost on how to calculate the total savings after the delay. Does it mean we just start counting the savings from month five?
TE
Terry
1 year ago
I practiced a similar question where we had to account for delays in savings. I think we need to subtract the first four months from the total savings.
LY
Lynsey
1 year ago
I think the payback period starts counting after the initial investment, so we should focus on the $23,500.
LA
Laticia
1 year ago
I remember we calculated payback periods in class, but I’m not sure if I should include the training cost in the initial investment.
KI
Kimberlie
1 year ago
Okay, I think I've got it. The key is to recognize that the savings start 4 months after the initial investment, so I need to account for that delay. Then it's just a matter of dividing the total investment by the monthly savings to get the payback period.
NO
Norah
1 year ago
I'm a little confused on how to approach this. Do I need to discount the future savings to present value or can I just use the nominal values? And should I round the final answer to the nearest month or leave it as a decimal?
MA
Marguerita
1 year ago
I've got this! The initial investment is $23,500 plus the $2,500 training cost, so $26,000 total. The monthly savings are $2,500, and they start after 4 months. So I just need to divide the total investment by the monthly savings to get the payback period.
ME
Melinda
1 year ago
Hmm, this is a tricky one. I'm not sure if I should include the training cost in the initial investment or just the project cost. And do I need to account for the 4-month delay before the savings start?
ST
Stephane
1 year ago
Okay, this looks like a classic payback period calculation. I'll need to find the total initial investment, the monthly savings, and then calculate the number of months it takes for the savings to equal the investment.
YA
Yaeko
1 year ago
I honestly can't remember the exact sequence of the five Ds. I thought "Develop" might make sense, but now I'm confused if it's more about just planning instead.
FI
Fidelia
1 year ago
Payback period? More like 'never get your money back' period! I'll just go with the highest option, D) 28.8 months, and hope for the best.
MI
Mindy
1 year ago
I agree, it's hard to calculate exactly. Let's just hope for the best with option D) 28.8 months.
SK
Skye
1 year ago
I'm not sure, but I feel like it might be longer than 10.4 months. Maybe option C) 14.4 months?
SH
Shalon
1 year ago
I think the payback period is shorter than 28.8 months. Maybe around 10.4 months, option B)?
VI
Virgie
1 year ago
Okay, let me think this through step-by-step. Ah, I got it! The answer is B) 10.4 months. This is going to be a breeze!
WA
Wai
1 year ago
Actually, it's B) 10.4
JE
Jerrod
1 year ago
No, I believe it's C) 14.4
LA
Lashaun
1 year ago
I think the answer is A) 7.2
EM
Emilio
1 year ago
Haha, this is like a financial riddle! I'm going to go with C) 14.4 months. Who knows, maybe I'll get lucky!
QU
Queenie
1 year ago
Wait, what? How do you even calculate this? I'm going to go with D) 28.8 months, just because it sounds the most reasonable.
TE
Tequila
1 year ago
That makes sense. I'll change my answer to A) 7.2 months as well.
TE
Tequila
1 year ago
I see, thanks for explaining. I think I'll go with A) 7.2 months then.
TE
Tequila
1 year ago
It's actually calculated by dividing the initial investment by the monthly savings. So, the answer is A) 7.2 months.
CH
Chauncey
2 years ago
I think the answer is A) 7.2 months. The monthly savings are $2,500 and the initial investment is $23,500, so the payback period should be around 7.2 months.
ZA
Zachary
1 year ago
Yes, it helps determine how long it will take to recoup the initial investment.
GE
Georgene
1 year ago
I think it's important to consider the payback period when evaluating projects.
LE
Lemuel
1 year ago
That makes sense, the monthly savings will cover the initial investment in 7.2 months.
KE
Keneth
1 year ago
I agree, the answer is A) 7.2 months.
TH
Thea
1 year ago
That makes sense, the monthly savings will cover the initial investment in 7.2 months.
MA
Macy
1 year ago
I agree, the answer is A) 7.2 months.
EL
Elizabeth
2 years ago
But if we calculate the payback period based on the initial investment and monthly savings, it should be around 10.4 months
DA
Dana
2 years ago
I disagree, I believe the answer is B) 10.4
EL
Elizabeth
2 years ago
I think the answer is A) 7.2