I spend $60 per month on bus fares to work. One day I decide to buy a mountain bike for $1680 and to ride to work instead. Assuming I work 12 months in a year, and my MARR is 1% per month, compounded monthly, what is the discounted payback time for this investment?

A) two years five months

B) two years seven months

C) two years eight months

D) two years nine months

E) two years ten months

The solution is D.

I know the First Cost is $1680, and the Annual Savings = ($60/month) x (12 months) = $720, when I write my table get discounted payback time of 2 years and 6 months.

2y,5m = 29 months = 720 (P/F, 0.01, 29) = $960.84

2y,6m = 30 months = 720 (P/F, 0.01, 30) = $970.45, cumulative = $1931.29