Business Decision Making: Payback Period, NPV, Financial and Non-Financial Factors

Business decision making

Table of Contents
INTRODUCTION...........................................................................................................................2
Payback Period............................................................................................................................2
Net Present values........................................................................................................................3
Financial and non- financial factors............................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business decision making is that process which allow professionals to solve problem by
examining the best path for the company. Similarly, the present study is also based upon DDK
plc which is a textile company and also operating in UK. Thus, the manager wants to invest in a
project manufacturing belts and wants to choose from two projects. For that the study will
calculate NPV and Payback period. Further, it also describes the financial as well as non-
financial factors use to make decision.
Payback Period
For project A:
Initial Investment = 170000
Year Net cash flow Cumulative Cash flow
1 45000 45000
2 45000 90000
3 35000 125000
4 70000 195000
5 82000 277000
3 years (170000 – 125000 = 45000)
45000 / 70000
3 years 6
month
For project B
Initial investment = 190000
Yea
r Net cash flow Cumulative Cash flow