Investment Appraisal Techniques for Business Decision Making: A Case Study of DD Plc Company

Individual Essay

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Payback period calculation of DD Plc company.........................................................................3
Net Present value calculation of DD Plc Company....................................................................4
Following are factors which aid business in decision making....................................................6
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Investment appraisal techniques play a vital role in business decision making. It refers to
techniques that are used by business people and shareholders to find out whether an investment
funds are profit making or not. This method is differentiated into two parts discounted and non –
discounted strategies, whereas discounted include Net present value, internal rate of return,
profitability Index and discounted payback period and non – discounted contain pay back period
and accounting rate of return (Schofield., 2018). DD Plc company consider these techniques to
find out best suitable investment which satisfy companies aim and objectives. Company has to
select one project from the smoothies and Non- diary milk which is more profitable in future.
This following report also includes financial and non – financial factors that affect business
decision-making.
TASK
Payback period calculation of DD Plc company
Every business firm uses different techniques before investing in a particular project. The
reason behind this practice is to gain more profit in future from these investments (Currie and
Fournier., 2020). DD Plc is a vegetarian product manufacturing company situated in the United
Kingdom, and a few parts of Europe also uses these techniques to choose the appropriate projects
that are Payback period and Net present Value.
Payback Period: The practice that helps to know the time of initial investment return from
a given period is known as the payback period (Glumac and Des Rosiers., 2020). It is helpful for
both business enterprises and investors to determine the break-even point. In the following table
of Payback is figuring out which project is a massive profit-making for the company DD Plc.
Year Project A – Smoothies
Net cash flow £
Cash flow Cumulative cash flows
0 -158000 0
1 72000 72000
2 78000 150000
3 82000 232000
4 110000 342000
5 125000 467000