Initial cost = £18 000Saving = £3000 each monthCalculate the payback time.Payback time = _____ months54 monthsLess than 1 month15 months6 months
Question
Initial cost = £18 000Saving = £3000 each monthCalculate the payback time.Payback time = _____ months54 monthsLess than 1 month15 months6 months
Solution
The payback time is calculated by dividing the initial cost by the monthly savings.
Step 1: Identify the initial cost and monthly savings. The initial cost is £18,000 and the monthly savings is £3,000.
Step 2: Divide the initial cost by the monthly savings. £18,000 / £3,000 = 6 months
So, the payback time is 6 months.
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