IASSC Certified Lean Six Sigma Yellow Belt (ICYB) — Question 11

Training cost is $3,000 and a project required an initial investment of $12,000. If the project yields monthly savings of $1,800 beginning after 3 months, what is the payback period in months (before money costs and taxes)?

Answer options

• A. 4.17
• B. 8.33
• C. 11.33
• D. 28.28

Correct answer: C

Explanation

The payback period is calculated by adding the initial investment and training cost, which totals $15,000. After 3 months, the project starts generating savings of $1,800 per month; it takes approximately 11.33 months from the start to recover the total investment. The other options do not account for the correct timing and amount of savings needed to cover the initial costs.