Calculation of Payback Period and NPV for Project A and B

BUSINESS DECISION
MAKING

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
MAIN BODY..............................................................................................................................................3
1. Calculation of payback period in project A & B:.................................................................................3
2. Calculation of NPV:............................................................................................................................4
3. Analysis:..............................................................................................................................................6
CONCLUSION...........................................................................................................................................8
REFERENCES............................................................................................................................................9

INTRODUCTION
Organizations have to take crucial spending decisions in order to generate better income.
There are various approaches to perform an effective analysis of financial programs, including a
net present value, intrinsic return expectations and many more (Schwartz, 2016). The study is
based on XYZ plc that is trading in United Kingdom. The company has two products that are
Software project and Launderette project. The report covers detailed information about
calculations such as payback period, NPV to analyze efficiency of project. Along with benefits
and drawbacks of these techniques is also mentioned under the report.
MAIN BODY
MAIN BODY
1. Calculation of payback period in project A & B:
For project A:
Initial investment= 100000
Years Cash flow Cumulative cash flow
1 28000 28000
2 32000 60000
3 35000 95000
4 55000 150000
5 78000 228000
Payback period= Year before recovery + amount to be recover / next year cash flow
= 3 + 5000/55000