After how many months will the company reach the break-even point?

A company plans to invest $580,000 to cover hardware, software, and deployment expenses. They expect to save $40,000 per month. They are using a decommissioning cost of $60,000 for the old equipment.

After how many months will the company reach the break-even point?
A . 8
B . 12
C . 14
D . 16

View Answer

Answer: D

Explanation:

Hardware, software, and deployment cost: 580.000

Existing hardware decommission cost: 60.000

Total Cost of Ownership: 580.000 + 60.000 = 640.000

Gain/month = $40.000

Total gain from investment in a year = $480,000

Break Point = 640.000 / 40.000 = 16 months