Business Decision-Making: NPV and Payback Period Analysis

Project (individual essay)
1

Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
1. Calculation of the payback period:.....................................................................................3
2. Calculation of NPV:...........................................................................................................4
3. Analysis:.............................................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................8
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Introduction
The function of the business decision-making within entity is step-by-step process that
helps professionals to solve problems by analyzing evidence, evaluating options, and then
agreeing on courses of action. This very well-structured approach also enables businesses to
determine if their decisions are acceptable (Yang and Gabrielsson, 2017). The study covers
computation of NPV and pay-back period along with analysis. Moreover, the it evaluates
financial as well as non-financial variables affects business’s decision-making.
Main Body
1. Calculation of the payback period:
Investment appraisal techniques: Payback Period:
Project A – Belt
Project
Cumulative cash flows
Investment -170000 -170000
1 45000 -125000
2 45000 -80000
3 35000 -45000
4 70000
5 82000
Payback
Period =
3 year + (45000/70000*12)
3 year and 7.71 months
Project B –Trainers
Project
Cumulative cash
flows
Investment -190000 -190000
1 50000 -140000
2 45000 -95000
3