Business Decision making

Business Decision making
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Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Calculation of payback period.....................................................................................................3
Working out of Net Present Value...............................................................................................4
Financial factors...........................................................................................................................5
Non financial factors....................................................................................................................5
CONCLUSION................................................................................................................................6
REFRENCES...................................................................................................................................6
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INTRODUCTION
Business decision making can be refers as most essential part of business management process.
Capabilities of manger determine hw effectively they take decision for their business. These
reports take case study of XYZ plc which is situated in United Kingdom and run their business in
hospitality sector. The organization has 2 option whatever to invest in the software and
Laundrette service or outsoaring these series. This report is defined how manger take decision by
using capital budgeting technique and factor they directly and indirectly affect the decision
making cretin of business organization.
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TASK 1
Calculation of payback period
Payback period can be defined as the technique of capital budgeting through which mangers
identify the recovery time project activities take to fulfil their initial cost. Or to achieve the
breakeven point. Higher pay back time period represents the slower growth rate of the business
project. This method of capital budgeting useful for easily calculate and take decision for making
enterprise (Hicks and 2015).
Payback period for Project A (Software Project)
Year Cash inflow in £ Cumulative cash inflow
1 28,000 28000
2 32,000 60000
3 35000 95000
4 55000 150000
5 78000 228000
Formula of payback period= Base year +Initial investment- Cumulative cash inflow of base
year / Upcoming year cash inflow
3+100000-95000/55000= 3.90
Payback period for project B (Laundrette Project)
Year Cash inflow in £ Cumulative cash inflow
3