Analysis of Investment Decision Making for Genesis & Dreams Ltd

This report examines business decision-making, focusing on investment decisions within the context of Genesis & Dreams Ltd, a construction sector company. It analyzes investment appraisal techniques such as the payback period method and net present value (NPV) to evaluate project viability. The report calculates payback periods for two projects, Project A and Project B, and determines the preferred investment based on the shorter payback time. It then applies the NPV method to both projects, considering time value of money, and identifies the project with the higher NPV as financially advantageous. Furthermore, the report discusses the influence of both financial factors, including project life and expected cash inflows, and non-financial factors, such as the business environment and employee capabilities, on the investment decision-making process. The conclusion emphasizes the importance of these appraisal methods in making informed investment choices.

business decision making

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
Investment decision making..............................................................................................................3
CONCLUSION.....................................................................................................................................6
REFERENCES......................................................................................................................................7

INTRODUCTION
Business decision making is denoted as taking decisions in favour of the organisation
to enhance and boost the growth rate of company (Wang and Du, 2016). This project is based
on the case study of Genesis & Dreams Ltd in respect to its investment decision making. The
organisation is based in construction sector. Henceforth this report would analysis the
investment decision making on the basis of different investment appraisal techniques such as
NPV, payback period and different oter aspects. Financial and non financial factors also
evaluate that influence the investment decision making of the company.
MAIN BODY
Investment decision making
Payback period method
Payback period method is a critical investment appraisal technique to make the best
level of investment decisions. This is a key technique to analysis the investment decision
making of organisation. Payback period is the time required to organisation to recover its
overall investment in the certain decision. This is the minimum time needed to organisation
to recover its overall investment money (Antony and Joseph, 2017). On the basis of the
estimated future cash inflows investment decision is analysed in this method. Once the
company generate its overall investment amount all the post period inflows of company are
denoted as the profits of the organisation. In this method on the basis of the time of the
payback period investment decision is taken. The minimum the payback period company
address is favourable for the organisation.
Project A= Software Project
Total investments = £ 70000
Cash inflow
Year Cash Inflow (£) Total cash inflow (£)
1 18000 18000
2 16000 34000 (18000 + 16000)
3 19000 53000 (18000 + 16000 +
19000)

4 22000 75000 (18000 + 16000 +
19000 + 22000)
5 37000 112000 (18000 + 16000 +
19000 + 22000 + 37000)
Payback period = 3 + 9.27 (17000/ 22000 * 12) [ 70000 – 18000 - 16000 - 19000]
= 3 year and 9.27 months
Project B – Hardware Project
Total investment = £ 84000
Cash inflow
Year Cash Inflow (£) Total cash inflow (£)
1 21000 21000
2 27000 48000 (21000 + 27000)
3 30000 78000 (21000 + 27000 +
30000)
4 32000 110000 (21000 + 27000 +
30000 + 32000)
5 32000 142000 (21000 + 27000 +
30000 + 32000 + 32000)
Payback period = 3 year + 2.25 (6000 / 32000 * 12) [£ 120000 – 21000 - 27000 - 30000]
= 3 year and 2.25 months
Justification
On the basis of the payback period method company should investment in Project B
as it contain lesser payback time as compare to project a.
Net present value method
Net Present Value is another technique that is used to make the investment decisions
in favour of the organisation. This is the technique where investment decisions are taken on

the basis of the cash inflow, total investment and time value of money. All these factors play
role in this technique to make the best possible decision in favour of the organisation. Net
present value generate result in financial form where company get to know about the
potential level of financial benefits company will receive against the investment it has made
in a certain project (Dhankar, 2019). This method denotes the maximum amount of potential
financial advantage company would receive against the investment it has made in a certain
project.
Project A
Year Cash inflow (£) Time value of
money (@14%)
Actual future cash
inflow (£)
1 18000 .88 15840
2 16000 .77 12320
3 19000 .67 12730
4 22000 .59 12980
5 37000 .52 19240
Total cash inflow (£) = 73110 ( 15840 + 12320 + 12730 + 12980 + 19240)
Net present value (£) = Total expected cash inflow – Total Investment
= 3110 (73110 – 70000)
Project B
Year Cash inflow (£) Time value of
money (@14%)
Actual future cash
inflow (£)
1 21000 .88 18480
2 27000 .77 20790
3 30000 .67 20100
4 32000 .59 18880
5 32000 .52 16640
Total cash inflow (£) = 94890 (18480 + 20790 + 20100 + 18880 + 16640)

Net present value (£) = Total expected future cash inflow – Total investment
= 10890 (94890 - 84000)
Justification
On the basis of the net present value method company should invest in Project B. This
contains the maximum net present value on the basis of the net present value method.
Financial factor
Financial factors are among the key factors that influence the investment decision of
the organisation. This involve different factors such as total life of the project, scrap value of
the investment, expected inflow of the project and different other factors. This also contains
the financial stability of the organisation (Gupta and Ahmed, 2016). How much the
organization is financially capable influence the entire financial decision making of the
organisation. Financial factors directly influence the investment decision making of the
organisation. All these financial aspect influence the overall investment which organisation is
supposed to make on its investment decision making.
Non financial factor
Non financial factors are also the key factors that influence the investment decision
making of the organisation. This involve the business environment of the company, culture of
organisation and different other factors (Liu and Yi, 2018). It also comprises with the
potential and capabilities of the employees of company to utilise the investment in favour of
the organisation. Its crucial that employees of company must be able to deal with the latest
technology and equipment which company is aiming to investment in the organisation as a
part of investment decision. Non financial factors also involve the feasibility of the project.
All these non financial factors allow the organisation to make the best level of investment
decision in favour of the organisation.
CONCLUSION
Investment decision making is about to make the best level of investment decision in
favour of the organisation. Payback period is the time required to recover the overall
investment company has done in a certain project. Net present value is the expected financial
benefits company will gain out of the investment decision it has made.

REFERENCES
Books and Journals
Antony, A. and Joseph, A. I., 2017. Influence of behavioural factors affecting investment
decision—An AHP analysis. Metamorphosis. 16(2). pp.107-114.
Dhankar, R. S., 2019. Capital Markets and Investment Decision Making. Springer India.
Gupta, Y. and Ahmed, S., 2016. The impact of psychological factors on investment decision
making of investors: An empirical analysis. EPRA International Journal of
Economic and Business Review. 4(11).
Liu, P. and Yi, S. P., 2018. Investment decision-making and coordination of a three-stage
supply chain considering Data Company in the Big Data era. Annals of Operations
Research. 270(1-2). pp.255-271.
Wang, X. and Du, L., 2016. Study on carbon capture and storage (CCS) investment decision-
making based on real options for China's coal-fired power plants. Journal of Cleaner
Production. 112. pp.4123-4131.