Business Decision Making

Business Decision Making

TABLE OF CONTENTS
Evaluating the feasibility of investment proposals for A&B plc...........................................3
Different factor considers at the time of making financial decision......................................5
REFERENCES...........................................................................................................................7

A business organization attains success only because of the decision taken by it at the
right time. The business organization is required to take decision in regard to various aspects
of the business in order to effectively attain its goals and objectives. This essay depicts the
range of techniques that can be used by the organization in order to evaluate the investment
decisions and the factors affecting it.
Evaluating the feasibility of investment proposals for A&B plc
In the given case, NPV and the PBP capital budgeting technique will be used in
evaluating the investment proposals for the A&B plc which has been evaluated below.
Net present value
The NPV is utilized for determining the profitability associated with the project. It
considered the future cash inflow converted in the present value (Lakew, 2017). This method
assists in determining the efficiency and profitability in respect to each of the project.
Project A
Computation of NPV
Year
Cash
inflows
PV factor
@ 14%
Discounte
d cash
inflows
1 30000 0.877 26315.8
2 35000 0.769 26931
3 40000 0.675 26999
4 60000 0.592 35525
5 90000 0.519 46743
Total discounted cash
inflow 162514
Initial investment 120000
NPV (Total discounted
cash inflows - initial
investment) 42514
Project B
Computation of NPV