Business Decision Making

Business Decision
Making

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
1. Computation of payback period:............................................................................................3
2. Calculation of NPV in project A and B:.................................................................................3
3. Analysis..................................................................................................................................4
CONCLUSION...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Decision making is crucial component of performance for business enterprises and
companies. Decisions relying on insight and rational thought could result the business to longer-
term prosperity; on other hand, decisions formed on the grounds of faulty logic, irrationality or
insufficient data can rapidly put businesses out of competition (Yang and Gabrielsson, 2017).
The report emphasise on the major elements of business decision-making based on practical case
study of A&B plc. Company is UK's restaurant chain and providing services like dishwashing
and software. Report covers comprehensive discussion about NPV, payback period along with
financial and non-financial factors' role in decision-making.
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
1 40000 40000
2 45000 85000
3 50000 135000
4 75000 210000
5 80000 290000
Payback period = 3 + (15000 / 75000 * 12)