You are required to write an essay on business decision making, comparing the key aspects of the tools like the payback period and NPV,
AJ plc is a chocolate manufacturing company, operating in the UK and some parts of the Europe. Currently, some of their productions such as vegan chocolates and vegan chocolate spread have been outsourced due to lack of available resources. However, strategic managers of AJ plc are looking to invest in a project manufacturing vegan chocolates or vegan spread. They have called new business proposals and have finally, chosen two projects using managers’ discretion to make final decision. Initial investment required for project A (vegan chocolate) is £140,000 and for project B (vegan spread) is £120,000. The discount rate required is at 11%. The net cash flows for two projects can be summarized as below:
You are required to write an essay on business decision making, comparing the key aspects of the tools like the payback period and NPV, and financial and non-financial factors used to aid decision making.
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