The financial feasibility study is an optimal tool to compare various investment opportunities through the evaluation of Net Present Value (NPV), and the Internal Rate of Return (IRR). The financial feasibility study develops projected financial statements for the project and is considered the project’s financial business plan. It contributes to the ability to monitor project delivery through the comparison between actual project expenditure with the expenses estimated in the financial statements.
For this report purposes, a Financial Feasibility study is conducted for the first three years of operations. This is to analyse the profitability of the business operations. Details of the working are attached in Annexure-1. Summary of the Financial Feasibility is provided in the next sub headings;
REVENUE
DIRECT COSTS
GROSS PROFIT
INDIRECT COSTS
NET PROFIT
REVENUE & NET PROFIT
RATIO ANALYSIS
NPV Analysis of the Project
| Net Cash inflow/ (Outflow) – Year 1 | (510,692) |
| Net Cash inflow/ (Outflow) – Year 2 | 302,566 |
| Net Cash inflow/ (Outflow) – Year 3 | 450,533 |
| Discounting Rate =10% | |
| NPV of the Project | + 404,003 |