Business Decision Making: NPV, Payback Period, and Factors

Essay on Business decision
making

Table of Contents
Introduction......................................................................................................................................3
Net present value..........................................................................................................................3
Payback period.............................................................................................................................4
Financial factors...........................................................................................................................6
Non financial factors....................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

Introduction
The following report focuses on business decision making (Abuseif and et.al 2018). Business
decision making is the continuous process which helps the professionals and managers of the
company to solve various problems whether it is related to evidence and uses of alternative apart
from this it can be related to making Strategies and policies in the favour of the company. This
report provides detailed information about NPV and payback period. Apart from this various
financial and non financial factors are being discussed in this report which impacts the decision
making of the company.
Net present value
Net present value is derived from the difference between cash inflow and cash outflow of the
company for a period of time. NPV provides the detail about the profitability of the project. In
this case Project A has 11757 npv and project B has 35764 which show that project bi is more
profitable for the investor and for the company. In both the projects the NPV is positive it means
the discounted present value of the future cash flows related to the project and discounted cash
flow is working in the favour of the projects. Npv accepts conventional cash flow pattern that it
provides more accurate result to the company apart from this it is one of the good way to
measure the profitability of the company and it also consists of the factors of risk which can harm
the profitability of the project that and we provide more accurate results to the company and the
investor as well.
Year Project A – Belt Project
Net cashflow £
Initial investment £ 170000
1 45,000
2 45,000