Unit 4 Business Decision Making Assignment Help

Unit 4 Business Decision Making Assignment Help

This is a solution of Unit 4 Business Decision Making Assignment Help in which we discuss Developing business

Task 4 (A)

Data given:

Description	Activity	Preceding activity	Duration in weeks
Replace windows in lounges	A	–	5
Rewiring	B	–	4
RE-plaster walls of lounge	C	A	2
Fir lights in lounges	D	B	1
Decorate bedrooms	E	B	5
Install pluming	F	B	5
Decorate lounge	G	C,D	4
Decorate kitchen	H	F	3
Decorate	I	F	2

ii. What is the critical path Project Duration?

Critical path = {Start à B à F à H à End}

= 4 weeks + 5 weeks + 3 weeks = 12 weeks(Kisilowski & Soros, 2014)

iii. Prepare a Gantt Chart and state the benefits of using it as a Project Management Tool. (AC 4.2)

Data given:

Activity	Description	Duration (Weeks)
A	Replace windows in lounges	5
B	Rewiring	4
C	Re-plaster walls of lounges	2
D	Fit lights in lounges	1
E	Decorate bedrooms	5
F	Install plumbing	5
G	Decorate lounges	4
H	Decorate Kitchens	3
I	Decorate	2

Benefits of Gantt chart:

• Gantt chart represents the activities in an effective manner or it renders the graphical representation of action plan.
• Time management is implemented effectively as it shows the duration of every activity in effective manner.
• It renders the facility of allocating the resources in adequate manner and also helps in managing them in adequate manner.
• With the use of it the coordination gets improved in effective manner.
• Different activities get managed in effective manner(Ogunfowora, et. al., 2013).

Read more : Contract and Negligence Assignment part 2

Task 4 (B)

I. Calculate the NPV and IRR of each project.

Net present value:

It is the technique rendered by capital budgeting in order to forecast the future profitability rendered by the project and helps in selecting the adequate options to earn profits. With the use of the discounting factors present value is calculated and helps in forecasting the profits for the projects(Ogunfowora, et. al., 2013).

Internal Rate of Return:

It is also an effective technique rendered by the capital budgeting and it get utilised in order to calculate the break-even point of the projects. In order to calculate the real profits NPV get utilised with the inflation rate(Ogunfowora, et. al., 2013).

Both the factor shows profits when they render positive balances and loss in case of negative balances. Higher the positive value higher the profits and vice-versa.

Project A:

Years	Cash Inflow	Cumulative	P.V. Factor@ 10%	P.V.	P.V.Factor @ 20%	P.V.
0	-250,000	250,000	1	-250,000	1	-250,000
1	100,000	150,000	0.909	90,900	0.833	83,300
2	115,000	35,000	0.826	94,990	0.694	79,810
3	125,000	-90,000	0.751	93,875	0.579	72,375
4	130,000	-220,000	0.683	88,790	0.482	62,660
5	140,000	-360,000	0.621	86,940	0.402	56,280
				205,495		104,425

(Ogunfowora, et. al., 2013)

NPV = 455,495 -250,000 = 205,495

NPV = 205,495

IRR = 10% + {(455,495 – 250,000) / (455,495 – 354,425)} * [20% – 10%]

= 10% + {(205,495 / 91,070)} * 10%

IRR = 32.56%(Forquer Gupta, 2012)

Project B

Years	Cash Inflow	Cumulative	P.V. Factor@ 10%	Present Value	P.V. Factor @ 20%	Present Value
0	-250,000	250,000	1	-250,000	1	-250,000
1	90,000	160,000	0.909	81,810	0.833	74,970
2	125,000	35,000	0.826	103,250	0.694	86,750
3	135,000	-100,000	0.751	101,385	0.579	78,165
4	110,000	-210,000	0.683	75,130	0.482	53,020
5	85,000	-295,000	0.621	52,785	0.402	34,170
				164,360		77,075

NPV = 414,360 – 250,000

NPV = 164,360

IRR = 10% + {[414,360 – 250,000] / [414,360 – 327,075]} * (20% – 10%)

= 10% + {164,360 / 87,285} * 10%

IRR = 28.83%(Forquer Gupta, 2012)

II. Recommend which project you would undertake, if any. Provide reasons for your position.(AC 4.3)

Outcome of both methods are as follows such as:

Methods	Project A	Project B
NPV	205,495	164,360
IRR	32.56%	28.83%

Decision:

As per the results Project A should be preferred over Project B. The reason behind this Project A attains higher NPV as compare to Project B as Project A rendering profits as 205,495 which are  much higher as compare to Project B as 164,360(Jalal-Karim, 2013).

On the other hand the IRR of project A is much higher as compare to Project B such as Project A attains IRR as 32.56% whereas Project B attains IRR as 28.83%.

Due to higher profits and higher IRR Project A get preferred over the Project B(Jalal-Karim, 2013).

Conclusion

In the end it is concluded that for effective decision making adequate there is adequate need of research and analysis of information system. In order to get the current and accurate information there is effective need of gathering information from the primary sources and utilised it into their decision making. Survey is conducted with the use of questionnaire in order to gather the information from the primary sources. In order to calculate the average there are effective techniques are available such as mean, median and mode. For decision making in order to calculate risk standard deviation is utilised. In order to make easy and effective representation line chart and bar chart is utilised which helps in making easy understanding. In the end for calculating profits for the projects various profit evaluation techniques get utilised such as net present value and internal rate of return.

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