Certified Business Analysis Professional (CBAP) — Question 188

You are the business analyst for your organization and are trying to determine the best solution for an identified problem. You have determined that you could create a software solution using inhouse resources for $65,000 and with an ongoing support of $5,600 per month. A vendor offers you a quote that they can create the software for $49,000 with an ongoing support of $6,100 per month.
Which solution should you choose?

Answer options

• A. Create the software if you'll keep the solution less than 32 months.
• B. Create the software if you'll use the solution longer than 32 months.
• C. There is not enough information to determine which solution is financially better.
• D. Buy from the vendor if you'll keep the solution longer than 32 months.

Correct answer: B

Explanation

The correct answer is B because the break-even point is calculated by comparing the total costs of both options over time. If the solution is utilized for more than 32 months, the in-house development becomes more cost-effective than the vendor's offer, while the other options either miscalculate the time frame or suggest insufficient information.