At a cost of $12,000, Community Hospital is refinancing the mortgage on the building that houses its clinic. The hospital will save $500/month in interest. What is the payback period on the refinancing?
Payback method analysis the amount of time that will pass until you recover your capital. Since the capital is $12000 ant the payments are $500 per month, the payback period will be 12000/500 = 24 months.
