Business Decision Making

Business Decision Making

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
1. Computation of payback period:..........................................................................................................3
2. Calculation of NPV in project A and B:..............................................................................................4
3. Analysis...............................................................................................................................................5
CONCLUSION...............................................................................................................................................7
REFERENCES................................................................................................................................................8

INTRODUCTION
Decisions are taken at all executive systems to support the achievement of the overall or
company goals. Furthermore, the judgments constitute one of the main operating principles
embraced and enforced by each company in order to ensure maximum development (Arnott,
Lizama and Song, 2017). This report is based on the A&B plc restaurant chain, established in
UK which also operates their activities in Europe. Due to lack of resources, company wants to
outsource dishwashing and software project. In this report two types of investments techniques
such as net present value and payback period are applied with their advantage and disadvantage.
As per the result, company will take decision for the investment and identify the financial and
non financial factors.
MAIN BODY
1. Computation of payback period:
Project A – Dishwashing Project
Year Net cash flow Cumulative Cash Flow
1 30000 30000
2 35000 65000
3 40000 105000
4 60000 165000
5 90000 255000
Payback period = 3 + (15000 / 60000 * 12)
= 3 + 3 month
Project B –Software Project
Year Net cash flow Cumulative Cash Flow