Question

Program X has an annual cost of $35,000 and, in return, is expected to save the Company C $40,000 during the first year. Assuming the cost and savings are equally distributed across each month, after how many months will the company recover its investment in Program X?

Answer 1

Answer: (10 1/2) Months or 10.5 Months

Hence, in Ten and a half (10 1/2) Months, The Company will recover its investment in Program X.

Explanation:

Divide the savings in each month. (Twelve Months (12) in a year) by yearly savings to the company (C) from Praogram X that is equal to $40,000

• Calculate:

• Monthly Savings

40000 / 12 = 10000 / 3

= 3333.33333

• So, Now:

35000 / 40000 = .875

= 7/8

= 0.875

• Now:

0 .875 * 12 = 10 1/2 or 10.5 Months

• Draw the conclusion:

Hence, In 10 1/2 or 10.5 Months, The Company will recover its investment in Program X.

I hope this helps you!