Business Decision Making

Business Decision Making

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
Assessing the extent to which proposed investments prove to be viable for DDK plc.........3
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7

INTRODUCTION
In the current times, effective decision making becomes crucial for an organization
for building and sustaining competitive edge over others. In this regard, manager is required
to make evaluation of all the alternative available and take appropriate decision which aid in
organizational success. The current report is based on the case scenario of DDK plc which
deals in textiles and planning to explore operations for achieving success. Thus, report will
provide deeper insight about the project which DDK Plc should select with the help of
investment appraisal techniques.
Assessing the extent to which proposed investments prove to be viable for DDK plc
Investment appraisal may be defined as a strategic financial analysis tool which
emphasizes on analysing the attractiveness of potential investments. In this regard, there
several techniques which can be employed by DDK Plc for assessing the investment viability.
Hence, such techniques mainly include payback period, net present value, average and
internal rate of return which indicates financial viability of concerned projects (What is
investment appraisal, 2021). On the basis of current case, business unit is applying payback
and net present value method for identifying the option which prove to be more beneficial.
Payback method entails time period associated with the recovery of initial investment
(Alkaraan, 2017). Hence, by taking into account the results of payback method DDK Plc can
do profit planning in the best possible way. Along with this. NPV method entails return
which business entity of DDK Plc will get after the period of five years using time value of
money concept.
Payback period assessment
Year
Project A (in
£)
Cumulative Net cash inflows
(in £)
Project
B (Net
cash
flows:
Traine
rs
project
)
Cumulati
ve Net
cash
inflows
(in £)
1 45000 45000 50000 50000
2 45000 90000 45000 95000
3 35000 125000 70000 165000
4 70000 195000 90000 255000