Business Decision Making Report: Investment Appraisal and Analysis

This report delves into the critical realm of business decision-making, focusing on investment appraisal techniques and their application within a business context. It explores the use of tools like Net Present Value (NPV), Internal Rate of Return (IRR), and payback periods to evaluate investment opportunities. The report examines both financial and non-financial factors that influence decision-making processes, highlighting their importance in making informed choices. Furthermore, the report uses ABC Company as a case study to analyze investment decisions, providing recommendations based on the financial analysis. The conclusion emphasizes the importance of thorough analysis and consideration of all relevant factors when making business decisions. The report references key academic sources to support its findings and recommendations.

BUSINESS DECISION
MAKING

TABLE OF CONTENT
 Introduction
 Main body
 Conclusion
 References

INTRODUCTION
 Business decision making is the process where the
decision is required to be taken by the regarding the
activities and operations being carried out in the
business.
 The report covers the concept of decision making
and its importance for the business enterprise, using
various techniques used for giving more accurate and
reliable outcomes for making decisions. ABC is
planning to invests in new business for which it is
required to take decisions.

Business Decision-making and investment
appraisal techniques.
 Business Decision making
 Decisions could be referred as course of actions
that are chosen purposely from the alternatives
for achieving goals and objectives of the
organization. It is continuous & indispensable
component in the management of organizational
activities.

Investment Appraisal
 Investment appraisals refers to the collection
of various techniques which are used for
identifying attractiveness of the investments.
Investment appraisals are used by
organization for assessing the feasibility of
project or investments and identifying the
value that will be created by them.
 These investment appraisals form important
part of the decision making of management.
They give important base to the investment
decisions to be taken by the management.
There are various investment techniques
such as NPV, IRR, ARR and payback period.

Recommendations-
 ABC plc should adopt project B
that is the investment in
Hardware business. This project
is more profitable for the
business as the NPV is positive
and is also higher than A.
 On the other the payback
period is shorter than A due to
this will start earning profits
earlier. Therefore company
should make investment in
project B.

Financial and Non Financial factors in decision
making.
 Business requires both financial as well as non
financial information's for making informed decisions.
Both contain important information's and cannot be
ignored by the business.
 Financial factor represent the facts and figures related
to the incomes and expenditures of company. The
require detailed analysis of the financial operations and
the costs involved so that they can take cost control
measures and also focus over more productive areas.
 They are also important for analyzing the availability
of necessary funds for making investments and
carrying out the existing activities of business.

CONCLUSION
 This could be concluded from the
above report that decisions are very
important for the business and are
required to be taken after analyzing
all the factors.
 Managers can use investment
appraisal techniques for identifying
the feasibility of investments it is
proposing to take. Also both financial
and non financial factors are required
to be considered in taking decisions.

references
 Smit, H.T. and Trigeorgis, L., 2017. Strategic NPV: Real options and strategic games under
different information structures. Strategic Management Journal.38(13). pp.2555-2578.
 Marchioni, A. and Magni, C.A., 2018. Investment decisions and sensitivity analysis: NPV-
consistency of rates of return. European Journal of Operational Research. 268(1).pp.361-
372.
 Magni, C.A., 2020. Average Internal Rate of Return. In Investment Decisions and the
Logic of Valuation (pp. 415-486). Springer, Cham.
 Patrick, M. and French, N., 2016. The internal rate of return (IRR): projections,
benchmarks and pitfalls. Journal of Property Investment & Finance.