Solution-Compute the payback period

Compute the payback period

Reference no: EM132703849

Question - Case Study/Practical - Instructions - Analysis for a change project that is being considered reveals that it will cost $70,000 to establish (in year 0), and that the recurring costs for the next 3 years will be $25,000 (in years 1, 2 & 3). There will be no benefits in year 0, but there will be $96,000 worth of benefits each year in years 1 through to 3. Using the formula above, calculate the payback period and the ROI. What is your recommendation?

Years	Benefits	Costs
0	$0	$70,000
1	$96,000	$25,000
2	$96,000	$25,000
3	$96,000	$25,000
TOTAL BENEFITS	$288,000
TOTAL COSTS	$140,000

Required -

1. Compute the payback period?

2. Compute the Return on Investment (ROI)?

3. Would you recommend it as a good investment? Justify your answer.

Reference no: EM132703849

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Compute the payback period

Reference no: EM132703849

Reference no: EM132703849

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