Comparing Key Aspects of Decision Making Tools

Business Decision
Making

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Comparing the key aspects of the tools such as NPV, Pay back period, financial and non-
financial factors that are used in decision making.......................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Business decision making is a process which is followed by all the business entities for
formulating strategic decisions for organisation so that success in future could be attained. When
it will not be possible to use it properly then it may result in failure of all the operations. Present
essay is based upon A&B Plc restaurant chain which is planning for investment in a project. For
the assessment of suitability of one of the options selected the entity has planned to analyse the
options available. For this purpose, different topics will be covered in this essay which are
payback period, net present value, financial and non-financial factors.
MAIN BODY
Comparing the key aspects of the tools such as NPV, Pay back period, financial and non-
financial factors that are used in decision making
One of the restaurants chains such as A & B Plc is mainly operating is United Kingdom
and some of the locations in Europe. Some of the key facilities are outsourced by it which
includes dishwashing and software. The management of the entity decided to make investment in
two of the projects which are software and dishwashing. The key information related to both of
them is as follows:
Investment for Dishwashing = 120000
Investment for Software = 150000
Discount rate for both projects = 14%
On the basis of above and other provided information payback period and NPV for both
the projects will be calculated as it helps to formulate the future decisions. The calculation of
them is as follows:
Payback period: This method is used to analyse the time duration in which the
investment will meet the BEP point. In other words, it can be defined as the approach which
helps the managers to analyse that the project in which they will be investing will be able to
repay the value of it in less period or not (Alam and Dornberger, 2019). The calculation of it for
both the projects of A&B Plc is as follows:
Formula: Years covered by investment + Cost of the project – CCI of the completed
year / cash inflow of upcoming year
Years Project A CCI
1