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CCBA · Question #136

CCBA Question #136: Real Exam Question with Answer & Explanation

The correct answer is C. 64 months. To answer this question, you need to compare the total cost of ownership (TCO) of the two solutions over time. The TCO is the sum of the initial cost and the recurring cost multiplied by the number of months. You can set up an equation to find the break-even point where the TCO o

Question

You are the business analyst for your organization. You're considering if you should make a solution or purchase it from a vendor. If your team creates the solution, it will cost $286,000 and will cost $2,400 per month to support. The vendor's solution, however, will cost $239,000 and will cost $2,850 per month to support. How long will you need to use your in-house solution to be more cost effective than the vendor's proposed solution?

Options

  • A105 months
  • B32 months
  • C64 months
  • D19 months

Explanation

To answer this question, you need to compare the total cost of ownership (TCO) of the two solutions over time. The TCO is the sum of the initial cost and the recurring cost multiplied by the number of months. You can set up an equation to find the break-even point where the TCO of the two solutions are equal: 286,000 + 2,400x = 239,000 + 2,850x Solving for x, you get x = 64. This means that after 64 months, the TCO of the two solutions will be the same. Therefore, you need to use your in-house solution for more than 64 months to be more cost effective than the vendor's solution.

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