Initial cost = £18 000Saving = £3000 each monthCalculate the payback time.Payback time = _____ months54 monthsLess than 1 month15 months6 months

1. Break Down the Problem

To calculate the payback time, we need to determine how long it takes for savings (monthly contributions) to cover the initial cost.

2. Relevant Concepts

• Initial Cost: £18,000
• Monthly Savings: £3,000
• Payback Time (in months): Payback Time = Initial Cost / Monthly Savings

3. Analysis and Detail

Using the formula to find the payback time: $\text{Payback Time} = \frac{\text{Initial Cost}}{\text{Monthly Savings}} = \frac{£18,000}{£3,000}$

Calculating: $\text{Payback Time} = 6 \text{ months}$

4. Verify and Summarize

The calculation shows that it takes 6 months for the savings to cover the initial cost of £18,000.

Final Answer

Payback time = 6 months.