Lecture 14 Flashcards
Financial Feasibility Analysis
To determine the financial viability of a proposed project
Financial Feasibility Analysis
Steps in Financial Feasibility Analysis
- Derive financial values and prepare the reference table
- Prepare cash flow table (may use spreadsheets)
- Determine discounted values values should be in the same time frame
- Compute the financial profitability indicators
Steps in Financial Feasibility Analysis
1. Derive financial values and prepare the reference table:
a. Items/units
b. Labor rate
c. Productivity rate
d. Market price
e. Interest rate
Steps in Financial Feasibility Analysis
2. Prepare cash flow table (may use spreadsheets)
a. Production inputs
b. Production outputs
c. Revenues
d. Costs
e. Net revenues
“a single number that is calculated for characterisation of project profitability in a concise and understandable form
Financial Profitability Indicators
COMMON INDICATORS of Financial Profitability Indicators
- Simple Payback
- Return on Investment (ROI)
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
Number of years to recover an investment
Payback Period (PP)
Payback Period (PP)
Number of years to recover an investment
Annual rate of recovery of investment
Return on Investment (ROI)
Return on Investment (ROI)
Annual rate of recovery of investment
Discounted net benefit
Net Present Value (NPV)
Net Present Value (NPV)
Discounted net benefit
Rate of increase of investment
Internal Rate of Return (IRR)
Internal Rate of Return (IRR)
Rate of increase of investment
