Business Decision Making: Computation of NPV and Payback Period

Business decision
making

Contents
INTRODUCTION...........................................................................................................................1
Main body .......................................................................................................................................1
Computation of Net Present Value (NPV) of each projects........................................................1
Calculation of Payback period (PBP) of both the projects .........................................................3
Analysis and evaluating the both the techniques in project A and project B..............................4
Financial and non financial factors on investment decision .......................................................5
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business decision making process is range of process which allow experts to find the solution by
weighing proof, gathering information and analysing choices. Business decision is also known as
operational decision. In this written document, appraisal of the two projects by using discounting
and non discounting techniques which net present value or payback period (Castle and Smith
2019). Further, it consider to pick up one best techniques among these two to select one project
either A or B. In the end, report consider financial or non financial factors and their impacts on
investment conclusion.
Main body
Computation of Net Present Value (NPV) of each projects
In general, Net present value is a analysis tool which is used for deciding whether to make
money invested in a capital asset and determining the feasibility of project investment. It has
benefit in terms of reduced cash flows to one numeric value that is easily compared to other
projects Net present value(NPV). To determine the Net present value following formula to be
consider -
Cash flows
Net present value (NPV) = ------------- - initial investment
( 1 + i )t
Net present value of Project A
1