Certified Business Analysis Professional (CBAP) — Question 1

You are the business analyst for the TGH Organization and are determining if you should buy or build a solution for your company. You have determined that you can create the in-house solution for $78,000 with a monthly support cost of $8,765. A vendor can create the solution for $61,000 with a monthly support costs of
$7,990.
How long will it take your company to break even if you choose the internal solution versus the vendor's solution?

Answer options

Correct answer: D

Explanation

The correct answer is D, as the break-even point occurs when the total costs of both options are equal. The internal solution starts with a higher upfront cost and higher monthly costs, which will take approximately 22 months to surpass the total cost of the vendor's solution, given its lower initial and monthly expenses. The other options do not accurately reflect the calculated break-even period based on the provided costs.