You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $4,600 and will be posted for one year. You expect that it will generate additional revenue of $874 a month. What is the payback period?
Monthly Revenue = $874
Annual Revenue = $874 * 12
Payback Period = Project cost ÷ Annual Revenue
= $4,600 ÷ $10,488 * 12 months
= 5.26 months