Business Decision Making

Business decision making

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Determining the viability of capital project undertaken by ABA Plc..........................................3
Calculation of Payback period ....................................................................................................3
Computation of Net Present Value (NPV) .................................................................................4
Assessing financial and non-financial factors that assist in decision making process................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Decision making refers to selection of a course of action from two or more possible
alternatives in order to reach a solution for given problem. It is an integral part of management as
it determines both organisational and managerial activities in organisation. This project is based
on the case scenario of ABA plc which offers branded cycles to the customer in Europe. In this,
report will highlight how capital budgeting tools aid in decision making. Further, it will present
monetary and non-monetary factors that need to be considered while making business decisions.
MAIN BODY
Determining the viability of capital project undertaken by ABA Plc
Calculation of Payback period
Project A
Computation of Payback period
Year Cash inflows (in £)
Cumulative cash inflows (in
£)
1 35000 35000
2 40000 75000
3 45000 120000
4 80000 200000
5 92000 292000
Initial investment 140000
Payback period
3 + (140000 – 120000) /
80000 = 3.03
Payback period 3 years and 3 months
Project B