Business Decision Making

Business Decision Making

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Calculation of the payback period...............................................................................................1
Analysis.......................................................................................................................................2
Financial factors & Non Financial factors analysis:...................................................................3
Practical implication....................................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Business decision making can be defined as a course of action where an organisation
select right alternatives to acquire organisational goals & objectives effectively. It is a continuous
procedure and indispensable element that arrange business operation of an organisation (Keren
and Wu, 2015). A manager play essential role in business related decisions. These decisions are
taken by managers as per the necessity and requirements. In this report consist of different
aspects that helps in decision making procedure such as Net present value, Pay back period and
other non financial factors.
MAIN BODY
Year
Project A –
Technologic
al Project (£)
Cumulati
ve
Discount
factor
(12%)
Present
value
Project B –
Mechanical
Project (£)
Cumulati
ve
Discount
factor
(12%)
Present
value
0 (£40000) (£40000) (£60000) (£60000)
1 8000 (32000) 0.893 7144 10000 (50000) 0.893 8930
2 12000 (20000) 0.797 9564 20000 (30000) 0.797 15940
3 16000 (4000) 0.712 11392 25000 (5000) 0.712 17800
4 20000 16000 0.636 12720 30000 25000 0.636 19080
5 30000 40000 0.567 17010 40000 65000 0.567 22680
Total 57830 Total 84430
£20000-
£18000 £2000
£30000-
£25000 £5000
Calculation of the payback period
For Project A
Payback period = 3 years + (4000/20000 * 12) Months
= 3 Years + 2 Months
1