Business Decision Making

Business Decision Making

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
Analysing the viability of proposed investment using investment appraisal tools &
techniques...............................................................................................................................3
Financial and non-financial factors that used in decision making.........................................5
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7

INTRODUCTION
Business decision making may be defined as the process of selecting best option out
of several alternatives available. It is an accountability of manager to evaluate all the aspects
risk, return, expenses etc while making section of projects. This report is based on the case
scenario of DDK plc, a textile company, which have two alternates for investment purpose.
In this regard, report will highlight how investment appraisal techniques can be used for the
selection of suitable project.
Analysing the viability of proposed investment using investment appraisal tools & techniques
Investment appraisal techniques include payback period, net present value, average
and internal rate of return which lays focus on appraising capital project. It emphasizes on
evaluating projects from different angles and provide deeper insight about the extent to which
potential investment prove to be viable financially (Pawlak and Zarzecki, 2020).
In order to attain success and gaining competitive advantage DDK plc is planning to
invest funds in the profitable opportunities available for business. Moreover, maximization of
both productivity and profitability is one of the main motive of organization. According to
the cited case scenario company has two options for investment such as belt manufacturing
and trainers. In this regard, both payback and NPV method has been applied for analysing the
extent to which potential investment assists in achieving business objectives.
Payback period method implies for the time period which firm will take for reaching
at break-even point. By this, business entity can ascertain time after which profit will be
gained (What is the Payback Period?, 2021). In this way, payback method contributes in
financial planning and decision aiming as well.
Computation of payback period
Year Project A Cumulative Net cash inflows
1 45000 45000
2 45000 90000
3 35000 125000
4 70000 195000
5 82000 277000