Investment Decision Making: A Case Study of A&B Plc

Essay

Table of Contents
INTRODUCTION.................................................................................................................................3
Task.......................................................................................................................................................3
Investment decision making..............................................................................................................3
CONCLUSION.....................................................................................................................................7
REFERENCES......................................................................................................................................8

INTRODUCTION
Investment decision making is all about talking decision in respect to the investment
company is looking to make to expand the business potential (Nisa, 2017). This report is
based on the case study of A&B Plc in respect to its investment decision making. This is a
restaurant chain. Henceforth, report would emphasis over the decision making of the
company in respect to its investment for expansion of company’s growth.
Task
Investment decision making
Payback Period Method
Payback period is a time in which company will be able to recover its original
investment. This the time needed to company to recover all the investments company has
made. This is the time needed to company recover its original investment company has made
in a certain system (Antony and Joseph, 2017). Payback period do not denote about the
operational profitability company generate out of the business operations it is a just a time
needed to cope up with the initial level of investment of company in a certain system or a
machine. This analysis is done in between cash inflows and total investment at initial level.
Company always prefer such investment options that consist up less payback period so that
company will require lesser time to come up with the initial level of investment.
A&B Plc needs to take its investment decision. Company has two investment options
one is in Diswashing project and the other one is Software Project. Both investments carry
different cash inflows and investment amounts.
Project A
Year Cash Inflow / Outflow (£) Accumulated Cash Inflow
(£)
Initial Invetsment
0 120000
Cash Inflow
1. 30000 30000
2. 35000 65000 (30000 + 35000)
3. 40000 105000 (30000 + 35000 +