Business Decision Making

Business Decision Making

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Calculation of payback period....................................................................................................1
Calculation of Net Present Value................................................................................................2
Financial and Non financial factors............................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
The decision making procedure consist of recognise a goal, getting the relevant and
important information and weighting the options in order to make decisions. It is an integral part
of modern management and help business to achieve their set goals and objectives (Bennun and
et.al. 2018). This essay based on the ABA plc which is a branded cycle organisation and
conducting their business activities in United Kingdom and some parts of Europe. Company is
looking to invest in two projects and make final decisions. For the decision making using pay
back period and net present value method to analysis which project is better. Along with analysis
different financial and non financial factors to aid decision making.
MAIN BODY
Calculation of payback period
Pay back period: It is defined by the calculating the time required to recover an
investment. This method use by the investors in broad manner to analysis long term cash flow
due to no information required beyond the break even point (Kimmel, Weygandt and Kieso,
2018). It is mainly use by the company to calculate time period from the beginning of project to
recover the capital investment.
Project A
Year Cash Inflow Cumulative Cash flow
0 140000 1,40,000.00
1 35000 1,05,000.00
2 40000 65,000.00
3 45000 20,000.00
4 80000 -60,000.00
5 92000 -1,52,000.00
Payback Period = 3.25 years
Project B
1