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Business Decision Making

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Added on  2023-01-05

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This essay discusses the importance of decision making in business management and provides an evaluation of an investment proposal. It explains the application of investment appraisal techniques, such as net present value and payback period, and compares two projects. The factors to be considered for undertaking decisions, both financial and non-financial, are also discussed.

Business Decision Making

   Added on 2023-01-05

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Business Decision
Making
Business Decision Making_1
TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
Application of investment appraisal techniques....................................................................3
Factors to be considered for undertaking decisions...............................................................5
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7
Business Decision Making_2
INTRODUCTION
Decision making is an important function of business management which states that
a business organization can only survive through the way of taking right decisions pertaining
to the business. At every step, an organization is required to take decisions which can be
monetary terms and in non-monetary. This essay provides an evaluation of the investment
proposal of the Genesis & Dreams Ltd and along with that the factors which are essential to
be taken into account for making decisions.
Application of investment appraisal techniques
For the purpose of determining the feasibility of the projects NPV and PBP method
is being applied in the given scenario.
Net present value
NPV helps an organization in knowing whether it is feasible to invest in the project
or not through the way of calculating the current value of the cash flow which will be
generated in the future (Dong and Li, 2016). If the outcome is positive, the project is accepted
otherwise rejected.
Calculation of NPV of Project A
Year Cash inflows PV factor
@ 14%
Discounted cash
inflows
1 18000 0.877 15789.47
2 16000 0.769 12311.48
3 19000 0.675 12824.46
4 22000 0.592 13025.77
5 37000 0.519 19216.64
Total discounted cash inflow 73167.82
Initial investment 70000
NPV (Total discounted cash
inflows - initial investment) 3167.82
Calculation of NPV of Project B
Year Cash inflows
PV factor
@ 14%
Discounted cash
inflows
Business Decision Making_3

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