Business Decision Making

Business Decision Making

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
Evaluating the feasibility of investment proposals for Genesis & Dreams Ltd...............3
Factor to be considered at the time of making financial decisions...................................5
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7

INTRODUCTION
Every business organization in order to gain success is required to undertake various
decisions which can be either financial or not. These decisions have a huge impact over the
accomplishment of the business objectives. This essay is based on making use of various
capital budgeting techniques which is utilized by the Genesis & Dreams Ltd for taking
investment related decision and factor that can aid in decision making.
Evaluating the feasibility of investment proposals for Genesis & Dreams Ltd
For evaluating the projects, the two techniques are being used which are stated below.
Net present value
This technique is helpful in knowing the present value of the future expected cash
inflow, which is derived by making use of discounting rate (Zhao and Zhang, 2019). This is
the most widely used technique for investment evaluation.
Project A
Computation of NPV
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
Project B
Computation of NPV
Year Cash inflows
PV factor
@ 14%
Discounted cash
inflows