QuestionQ9

Security Principles

To safeguard its information assets, ABC Company buys a safeguard for $60,000. The estimated annual cost to maintain the safeguard is $40,000. The combined Annualized Loss Expectancy for the risks the safeguard is intended to mitigate is $50,000.

At this rate of return, how long will ABC Company take to recover the cost of the safeguard?

  • A ABC Company will never recoup the cost of this safeguard.
  • B Less than 7 years
  • C Less than 3 years
  • D Less than 1 year
  • E Less than 5 years
Explanation

The net annual financial benefit is $10,000: the $50,000 annualized loss avoided minus the $40,000 annual maintenance cost. A $60,000 initial safeguard cost is therefore recovered in 6 years.

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