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Question:

Brad has done some research and decided a certain set of systems on his network fails once every ten years. The purchase price for each of these systems is 1,200. In addition, Brad finds the administrators on staff, who earn $50 an hour and estimate five hours to replace a machine. Five employees, earning $25 an hour, depending on each system and will be completely unproductive while it is down. If you were to ask Brad for an ALE on these devices, what would he answer?

A $207.50
Explaination

ALE = ARO × SLE. Divide the number of occurrences by the number of years (1 occurrence / 10 years = 0.1) to get ARO. To calculate SLE, add the purchase price (1200) to the time required to replace (5*50 = 250) and the amount of lost work (5 hours*5 employees*25 = 625). In this scenario, the total is $2075. ALE = 0.1*2075, which equals $207.50.