What is the payback period for an investment totaling $6400, with labor hours saved at 6 per week at $20/hour?

To determine the payback period for an investment, you need to calculate how long it will take for the savings generated by the investment to equal the initial cost. In this case, the investment totals $6,400, and the savings come from labor hours saved.

First, calculate the weekly savings from the labor hours. If 6 hours of labor are saved per week at a rate of $20 per hour, the weekly savings would be:

6 hours/week × $20/hour = $120/week.

Next, to find out how many weeks it will take for the savings to equal the investment, divide the total investment by the weekly savings:

$6,400 ÷ $120/week = approximately 53.33 weeks.

To convert this into months, note that there are about 4.33 weeks per month. Thus, dividing the total weeks by the number of weeks in a month provides:

53.33 weeks ÷ 4.33 weeks/month ≈ 12.33 months.

Since the payback period of approximately 12.33 months rounds to about 13 months, the most appropriate answer is that the payback period is 13 months. This illustrates how an investment can be effectively evaluated based on the monetary benefits accrued