If the cost to implement energy saving light bulbs is $1500 and they save $500 per year, what is the Payback Period?

To determine the Payback Period, you calculate how long it takes for the investment in energy-saving light bulbs to be recovered through the savings they provide. The formula for the Payback Period is the initial investment divided by the annual savings.

In this scenario, the initial investment is $1500 and the annual savings from using energy-saving light bulbs is $500. By dividing the total cost ($1500) by the annual savings ($500), we arrive at:

[

\text{Payback Period} = \frac{1500}{500} = 3 \text{ years}

]

This means it will take 3 years for the savings from the light bulbs to offset the initial cost of the bulbs. Understanding the Payback Period is crucial for making informed investment decisions in property management, as it helps assess the financial viability and timeline for recovery of costs associated with energy-efficient upgrades.