Evaluating the Viability of Project Using Investment Appraisal Tools and Techniques

Business Decision Making

TABLE OF CONTENTS
Evaluating the viability of project using investment appraisal tools and techniques..................3
REFERENCES................................................................................................................................8

Evaluating the viability of project using investment appraisal tools and techniques
Business decision making implies for the process of selecting best option out of several
alternatives available for the organization. Thus, manager is required to analyze and evaluate
project on the basis of cost as well as profitability aspect. This project is based on XYZ Plc, a
budget hotel chain, which provides customers or tourists with accommodation services. Due to
the lack of having enough resources firm is outsourcing software and launderette related
services. For building and sustaining competitive edge over others manager of XYZ Plc is
planning to invest money in software and launderette project. In this regard, report will develop
understanding about how investment appraisal techniques can be used for the purpose of
decision making.
On the basis of given case scenario, XYZ plc is outsourcing services pertaining to
software and launderette due to lack of having enough resources. Thus, for fulfilling
requirements pertaining to such aspects strategic manager of hotel chain is focusing on
identifying and selection of best investment option or proposal. As per the case, business unit has
two investment proposal software (A) and launderette (B) with varied initial investment. Hence,
by applying investment appraisal tools manager of XYZ plc can assess or evaluate its
attractiveness. This fundamental analysis is highly prominent which assists in identifying long
term trends or patterns. Hence, there are several method such as payback, net present value,
average and internal rate of return which entails whether proposed investment is aligned with
organizational goals and objectives or not (Harris, 2017).
In order to identify the attractiveness of the concerned projects such as A and B payback
as well as net present value method has been selected. Moreover, both these methods help XYZ
in analyzing project in a quantifiable manner. In other words, such methods provide deeper
insight about the profitability associated with the project being evaluated (Alkaraan, 2017).
Payback method exhibits the time that particular project will take for generating enough
cash flows in order to cover initial investment. Thus, manager of XYZ Plc can use this method
for the purpose of initial screening with regards to measuring liquidity and profitability aspect.
This technique is highly simple and easy to understand. Further, NPV method shows profit that
firm will generate from specific investment project after specific time period (Investment