Factors Influencing Decision Making in Business

Essay on Business
Decision Making

Table of Contents
MAIN BODY...................................................................................................................................3
REFERENCES................................................................................................................................6

MAIN BODY
Net Present Value
Discount rate 14.00%
A B
Year
Cash
flow PF Value
Discounted
value Cash flow PF Value
Discounted
value
1 30000 0.877 26316 40000 0.877 35088
2 35000 0.769 26931 45000 0.769 34626
3 40000 0.674 26999 50000 0.674 33749
4 60000 0.592 35525 75000 0.592 44406
5 90000 0.519 46743 80000 0.519 41549
162514 189418
Investment 120000 Investment 150000
NPV 42514 NPV 39418
Interpretation: From the above NPV analysis of the above presented two investment it
has been analysed that Project A will be better option for the manager to adopt as it has been
analysed that Project A net present value is higher than that of a Project B. NPV of Project A is
42514 at the same time NPV of Project B is 39418 it generally shows that it will be very much
better option for the company to adopt the Project A as project with higher NPV is always
beneficial for the manager as compare to project B.
Pay Back Period
A B
Investment cash Flow cash Flow
1 30000 30000 40000 40000
2 35000 65000 45000 85000
3 40000 105000 50000 135000
4 60000 165000 75000 210000