Use of Software-Generated Information to Make Organizational Decisions Essay

Words: 2031
Pages: 9

Use of software-generated information to make organizational decisions

CONTENTS
1 Introduction…………………………...………………………3
2 Analysis
4.1Use appropriate information processing tools………………………..4
4.2 Prepare a project plan for an activity and determine the critical path.5
4.3 Use financial tools for decision making……………………………..7
3 Conclusions………………………………………………….11
References…………………………..…………………………11

Introduction
The net present value method works out the present values of all items of income and expenditure related to an investment at a given rate of return, and then works out a net total. If it is positive, the investment is considered to be acceptable. If it is negative, the investment is considered to be
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wances (250,000) (250,000) (250,000) (250,000)
Taxable profit 37,000 195,200 395,750 67,520
Taxation (11,100) (58,560) (118,725) (20,256)
After-tax profit 25,900 136,640 277,025 47,264
Capital allowances 250,000 250,000 250,000 250,000
After-tax cash flow 275,900 386,640 527,025 297,264
Initial investment (1000000)
Working capital (50960) (29287) (37878) 59157 58968
Net cash flows (1050960) 246613 348762 586182 356232
Discount at 12% 1.000 0.893 0.797 0.712 0.636
Present values (1050960) 220225 277963 417362 226564
NPV=$91154
Workings
Sales revenue
Year 1 2 3 4
Selling price ($/unit) 20.80 21.63 22.50 23.40
Sales volume (units) 35,000 53,000 75,000 36,000
Sales revenue ($) 728,000 1,146,390 1,687,500 842,400

Variable costs
Year 1 2 3 4
Variable cost ($/unit) 12.60 13.23 13.89 14.58
Sales volume (units) 35,000 53,000 75,000 36,000
Variable costs ($) 441,000 701,190 1,041,750 524,880

Total investment in working capital
Year 0 investment=728,000*0.07=$50,960
Year 1