Business Decision Making

BUSINESS DECISION-
MAKING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business decision making is referred as course of action that are chosen primarily from
the set of alternatives for achieving the managerial or organisational goals or objectives.
Decision making is a continuous and a indispensable component for managing organisation and
its business activities. The present report will provide an understanding about how NPV and
payback period helps in decision-making. Further the financial and non financial data is also
addressed in the report.
TASK
Success of company is defined by the effectiveness of business decision-making process.
Organisations have a notional trend that decisions of only senior executives are considered and
that the decisions can be made only by them. Decision-making helps managers and business
professionals in solving the problems by examining alternatives and deciding the best and most
beneficial route (Wooldridge, and Cowden, 2020). Organisations follow a step-by-step
approach that is an efficient way of making informed and thoughtful decisions having the impact
over short term and long term objectives of company.
ABC plc a software company is planning to invest in new business. Company is available
with two proposals to invest. The financial decisions will be taken using the capital budgeting
techniques. It will enable the company to choose the best project.
Net Present Value – It is an tool used by the experts for checking the viability of project or
investments. Project is considered when the value left with the company after deducting cost of
investment from discounted cash flows is positive (Weber, 2019).
Payback period – The technique provides the managers the time period within which the cost of
investment will be recovered. Shorter the period more beneficial for the company as it will start
earning profits after recovering its cost.
PROJECT 1
Net Present Value of Project 1
Computation of NPV
Year Cash inflows
PV factor @
12% Discounted cash inflows
1