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Book Reports
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| Number of pages / Number of words: |
3 / 656 |
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Then include these factors, along with the average annual increase in productivity, sales, and so on, when calculating the program's payoff.
The following examples show how to use these additional factors in evaluating a training investment.
Averaging costs over the program's life cycle. An organization has decided to purchase equipment for producing in-house training videos, but is debating what type of equipment to buy...
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Camera A has a purchase price of $10,000, a $2,000 savings over the higher-priced Camera B. But after getting information on repair and maintenance, the cost breakdown over the equipment's life cycle of 15 years proves Camera B to be the better investment:
Camera A
Camera B
Initial investment
$10,000
$12,000
Maintenance
300
240
Operating costs (annual)
240
180
Repair costs (annual)
200
100
Total annual costs
$740
$520
Costs in year one (annual)
$10,740
$12,520
Costs in years two to 15
10,360
7,070
Life cycle costs
$21,100
$19,590
Determining the payback period...
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