Evaluating Feasibility of Investment Proposals for XYZ plc

Business Decision Making

TABLE OF CONTENTS
Evaluating the feasibility of investment proposals for XYZ plc............................................3
Different factor consider at the time of making financial decision........................................6
REFERENCES...........................................................................................................................8

The decision-making process is an essential part of every business organization as the
decision making is the key function of every business without which business cannot be run
smoothly. These decisions help in enhancing the performance of the business or for the
further business expansion. This essay provides an in-depth analysis of the various
investment evaluation techniques which can be used by XYZ plc for taking its decision.
Evaluating the feasibility of investment proposals for XYZ plc
The company is using two types of techniques which are, NPV method and the
payback period method for the purpose of evaluating the feasibility of the projects.
Net present value
It is the one of the capital budgeting technique which is used by the organizations for
the purpose of determining the profitability and the feasibility of the project (Rostarova and
Rentkova, 2016). It is calculated by subtracting total present value of cash outflow from the
present value of cash inflow. If the outcome is positive, then the organization should proceed
with the plan and if it is negative then it should drop the idea to invest in its as it is not
profitable.
Project A
Computation of NPV
Year Cash inflows
PV factor
@ 11%
Discounted
cash
inflows
1 28000 0.901 25225.2
2 32000 0.812 25972
3 35000 0.731 25592
4 55000 0.659 36230
5 78000 0.593 46289
Total discounted cash
inflow 159308
Initial investment 100000
NPV (Total
discounted cash
inflows - initial
investment) 59308