Factors Impacting Decision Making: Investment Appraisal Techniques for Akwaaba Plc

Essay 1000 words
This is first page
Cover page
A essay on
Factors impacting decision making
Table of content
Contents
Cover page.........................................................................................................................................1
Table of content................................................................................................................................1
Introduction...........................................................................................................................................2
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What is Payback period.........................................................................................................................3
Payback period for Project A.............................................................................................................3
Payback period for project B.............................................................................................................3
Net Present Value (NPV)....................................................................................................................4
Project A............................................................................................................................................4
Project B............................................................................................................................................5
Analysis..............................................................................................................................................5
Financial Factors Which impact investment..........................................................................................5
Non financial factors which impact investment.................................................................................6
Social impact..................................................................................................................................6
Opportunity cost...............................................................................................................................6
Conclusion.........................................................................................................................................6
Reference List....................................................................................................................................7
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Introduction
As per below report, some decision is made on the basis of analysing the performance. Akwaaba Plc
is a textile company which mainly operational in United Kingdom and other European countries.
Akwaaba Plc deals in Bags and shoes but it have been outsourced due to a lack of available
resources. Company has to select one product form the bag and shoes. In this report future
Profitability and success of both the product is measured with the help of investment appraisal
techniques and determine financial and non financial factor which effect decision making process.
What is Payback period
Before making a investment in a particular project, Company has to analyse project goodwill and its
future performance in the market. Company's generally apply some techniques to analyse future
investment returns and profitability of a particular project. Here Akwaaba Plc also using payback
period method to measure returns on both investments. Payback period refers to the time required
to recover the cost which incurred in an investment (Boddapati, Nandikatti and Daniel, 2021). It
plays a very important role in decision making process. This method applied here to compute future
returns of bath the investment. The calculation of payback period is as follows:
Payback period for Project A
Year Project A – Bags
Net cashflow £
Cash flow Cumulative cash flows
0 -180000 0
1 48,000 48000
2 62,000 110000
3 85,000
4 1,00,000
5 1,10,000
Payback period of project A = Years Before Break-Even + (Uncovered Amount / Cash Flow in
Recovery Year)
= 2 years + (70000 / 85000)
= 2 + 0.82
= 2.82 years
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