You are the business analyst for the TGH Organization and are determining if you should buy or build a solution for your company. You have determined that you can create the in-house solution for…

36 months is not produced by correctly applying the break-even formula to the given figures; the $17,000 cost difference divided by the $775 monthly difference yields approximately 22, not 36.

12 months is too short - at 12 months, the cumulative cost offset from the monthly difference ($9,300) does not yet cover the $17,000 upfront cost gap.

6 months is far too short - the monthly cost differential of $775 would recover only $4,650 of the $17,000 upfront difference in that period, well short of break-even.

The break-even point is calculated by dividing the difference in initial costs by the difference in monthly recurring costs: ($78,000 - $61,000) / ($8,765 - $7,990) = $17,000 / $775 = approximately 21.94 months, which rounds to 22 months. At this point, the total cumulative expenditure for both options is equal, and any further time beyond this month determines which option is more cost-effective long-term.