Business Decision Making: NPV and Payback Period Analysis

BUSINESS DECISION
MAKING

Table of Contents
INTRODUCTION...........................................................................................................................3
Calculation for NPV....................................................................................................................3
Calculation for payback period....................................................................................................4
Analysis and discussion:..............................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Business decisions making is the process that allow business professionals to solve issues
by examine alternatives, compare each other, weighing evidence and choosing a path from there.
This helps provide opportunities to know about that which decision is right for business. S&P
PLC is manufacturing company in UK. Company invest in producing the clothes bag and
synthetic bag project so there is business decision-making to used to make decision. This report
will elaborate the key aspects financial and non financial factors, NPV and payback period for
making decision which is right.
Calculation for NPV
Calculation of NPV for project A
Year Cash inflows PV
factor
@ 11%
Discounted cash inflows
1 60000 0.901 54054.05
2 68,000 0.812 55190.33
3 82,000 0.712 58365.98
4 109,000 0.659 71801.68
5 155,000 0.593 91984.96
Total discounted cash inflow 331397
Initial investment 185000
NPV (Total discounted
cash inflows - initial
investment)
146397