In Value Methodology, cost analysis often involves financial metrics like the payback period to evaluate the economic feasibility of alternatives, as taught in the VMF 1 course (Core Competency #4: Cost Analysis). According to SAVE International’s Value Methodology Standard, the payback period is “the time required for the cumulative savings or benefits from an investment to equal the initial cost, calculated as Initial Investment ÷ Annual Savings.” Here, the organization invests $160,000 in a software system that saves $3,000 per year.

Payback Period = Initial Investment ÷ Annual Savings

Payback Period = $160,000 ÷ $3,000 = 53.333 years

Rounding to the nearest whole number, the payback period is approximately 53 years.

The question does not specify adjustments for the time value of money (e.g., discounting), which aligns with the simple payback method commonly used in VM for straightforward analysis.

Option A (45 years) is incorrect because 160,000 ÷ 3,000 = 53.333, not 45.

Option B (50 years) is incorrect because it underestimates the payback period (53.333 years).

Option C (53 years) is correct, as it matches the calculated payback period when rounded.

Option D (56 years) is incorrect because it overestimates the payback period.