You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $ 8 comma 000$8,000 and will be posted for one year. You expect that it will generate additional revenue of $ 1 comma 280$1,280 a month. What is the payback period?

Question

Kaylah Waters

Business

15 March, 01:55

You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $ 8 comma 000$8,000 and will be posted for one year. You expect that it will generate additional revenue of $ 1 comma 280$1,280 a month. What is the payback period?

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Answers (1)

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Colton · Answer 1

The Payback period is

Explanation:

Payback period is the time in which initial investment is recovered from project cash inflows. It shows the time to pack back the initially cost incurred on the project or asset.

Cost to project = $8,000

Additional Revenue = $1,280

Payback period = Cost of project / additional revenue

Payback period = $8,000 / $1,280

Payback period = 6.25 years

Payback period = 6 years 3 months