Business Decision Making: An Investment Appraisal of Akwaaba Plc

This essay provides an analysis of investment appraisal techniques, specifically the payback period and net present value, in the context of Akwaaba Plc, a UK-based textile company. It determines the values for both techniques for Project A (bags) and Project B (shoes), concluding that Project B is more suitable for investment. The report also describes the financial and non-financial factors that influence business decision-making, including aspects like quick assets, leverage, managerial control, and customer satisfaction. Ultimately, the essay highlights the importance of investment appraisal techniques and various factors in making informed and profitable business decisions, suggesting that Akwaaba Plc can benefit from considering both financial metrics and qualitative aspects in their strategic planning. Desklib offers a range of similar solved assignments and study resources for students.

Essay on Business
Decision Making

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Determine the value of Payback Period of Akwaaba Plc:..........................................................3
Determine the value of Net Present Value of Akwaaba Plc:......................................................4
Describe Financial and non-financial factors which is used in decision making........................5
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In every organization business forecasting and decision making are important, different
enterprises uses different techniques to implement the proper plan. In this report, the Investment
appraisal techniques are described on behalf of the Akwaaba Plc, it is a company which is
running their business in the field of textile and it is located in the part of UK .The following
report is useful for the company in investment decision making and future growth and
development with the helpful investment appraisal techniques (Ali., 2020). This techniques
include two types of calculation that are Payback period and Net present value. After this
company is helpful in analysing that which project is better for the business in making the future
profitability . It is also consist two factors which affect affect the company financial decisions
such as financial and Non- financial factors.
TASK
Determine the value of Payback Period of Akwaaba Plc:
The business enterprises generally uses the some tool to take a proper and useful
judgement for future. Most commonly all the organization uses investment appraisal technique to
implement the plan of action (Hensher., 2020). This method contain two types of calculations
such as Payback period and Net present Value.
Payback Period: It is the tool or technique which is useful for computing the average time
consumed by the project to return the initial investing (Arafat., Iqbal and Hadi., 2020). It is
calculated for the purpose of investing and it is taken place basically by investors and
stakeholders. In below pay period value are figure out on behalf of the company Akwaaba Plc:
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 195000
4 1,00,000 295000
5 1,10,000 405000

Payback period of project A = Years Before Break-Even + (Uncovered Amount / Cash
Flow in Recovery Year)
= 2 years + (70000 / 85000)
= 2 + 0.82
Pay back period Of Project A = 2.82 years
Year Project B –Shoes
Net cashflow £
Cash flow Cumulative cash flow
0 -170000 0
1 45,000 45000
2 65,000 110000
3 82,000 192000
4 98,000 290000
5 1,10,000 400000
Payback period of project B = Years Before Break-Even + (Uncovered Amount / Cash
Flow in Recovery Year)
= 2 years + (60000 / 82000)
= 2 + 0.731
Payback period of project B = 2.73 years
Determine the value of Net Present Value of Akwaaba Plc:
Net present value: It is the another type of investment appraisal technique which provide
advantage to shareholder or investor to determine the fluctuated value by subtracting two values
(Mahmood., 2019).
Project A – Bags
Net cashflow £
Year Cash Flows PV Factor @ 14% Present Value
1 48,000 0.877 42096
2 62,000 0.769 47678
3 85,000 0.675 57375
4 1,00,000 0.592 59200

5 1,10,000 0.519 57090
Present value of Cash Inflow 263439
Net Present Value = Present value of cash inflow – Initial Cash investment
= 263439 – 180000
Net Present Value of project A = 83439
Project B –Shoes
Net cash flow £
Year Cash Flows PV Factor @ 14% Present Value
1 45,000 0.877 39465
2 65,000 0.769 49985
3 82,000 0.675 55350
4 98,000 0.592 58016
5 1,10,000 0.519 57090
Present value of Cash Inflow 259906
Net Present Value = Present value of cash inflow – Initial Cash investment
= 259906 – 170000
Net Present Value of project B = 89906
After analysing the result of both the net present value and pack back period it indicates
that Project B of shoes are more suitable for the company for investment because in both the
investment appraisal technique the ideal needs of business are fulfilling.
Describe Financial and non-financial factors which is used in decision making
Financial Factors: It is the factor which include the Quick assets, fixed assets, size of the firm,
leverage and the goodwill of the firm (Makridou., Doumpos and Galariotis., 2019). There are
followings types of financial factors which is used to aid in decision making.
 It is useful in making the investment decision or capital budgeting decision for future
profit making (Assi, Isiksal. and Tursoy., 2021).

 It is important at the time to taking the financial decision for the company. The decision
is depend on when, where and how should business acquire the fund.
Non – Financial Factor: This factor contain managerial control, government control and self-
directed board of commissioners (Lagerkvist. and Vesala., 2018). Following are several
importance of Non-financial factor in context of business decision making:
 It helps the business enterprise to maintain the position and goodwill in the market
economy by implementing and improving practices.
 Due to this practice company is helpful in making the good communication with buyers
and suppliers.
 This factor helps the manager and owner of the business in terms of directing and
motivating the employee (Suksatan and Ounprasertsuk., 2020).
 The main target of this factor is to satisfy the customer without impacting their ethical
beliefs. After implementing this practice business is resulted in making more profits and
outcomes.
 It gives the suggestion to choose or select the one project which is better for investment
purpose.
Akwaaba Plc trying this factor to work effectively and efficiently for making the
organization profitable and maintaining standard. The company also trying to make the good
relationship with customer without hurting their culture or tradition. It Further resulted that the
Non – financial factors are useful for strategic plan and business decision-making.
CONCLUSION
The above report is concluded about that how investment appraisal technique is useful for
the company in and decision and what types of tools they are contain to implement the process.
This report is also consist two types of investment techniques which are payback period and net
present value. These tools are helpful in the entire report for choosing the right project on behalf
of the company Akwaaba Plc. It resulted that the Project B that are deals in shoes are good for
the investment because it gives huge interest than project A. Moreover, it also describe two
factors of decision making which are financial and Non – financial in context of the given
company.

REFERENCES
Books and Journals
Ali, S.H., 2020. Environmental urgency versus the allure of RCT empiricism. World
Development. 127. p.104844.
Arafat, M., Iqbal, S. and Hadi, M., 2020. Utilizing an analytical hierarchy process with
stochastic return on investment to justify connected vehicle-based deployment
decisions. Transportation Research Record. 2674(9). pp.462-472.
Assi, A.F., Isiksal, A.Z. and Tursoy, T., 2021. Renewable energy consumption, financial
development, environmental pollution, and innovations in the ASEAN+ 3 group: Evidence from
(P-ARDL) model. Renewable energy. 165. pp.689-700.
Hensher, M., 2020. Incorporating environmental impacts into the economic evaluation of
health care systems: Perspectives from ecological economics. Resources, Conservation and
Recycling. 154. p.104623.
Lagerkvist, C.J. and Vesala, K.M., 2018. Impact of personal values and personality on
motivational factors for farmers to work with farm animal welfare: A case of Swedish dairy
farmers. Animal Welfare. 27(2). pp.133-145.
Mahmood, A., 2019. Introducing a novel system-of-systems axiomatic risk management
technique for production systems. Journal of Operational Risk. 14(1).
Makridou, G., Doumpos, M. and Galariotis, E., 2019. The financial performance of firms
participating in the EU emissions trading scheme. Energy Policy/ 129. pp.250-259.
Suksatan, W. and Ounprasertsuk, J., 2020. Health-Promoting Behaviors and Related
Factors in Patients with Chronic Diseases in a Rural Community. Systematic Reviews in
Pharmacy. 11(10).