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Finance & Accounting
Pages 5 (1255 words)
Running Head: PROJECT EVALUATION Project Evaluation Your Name School Contents INTRODUCTION 3 ANALYSING THE FEASIBILITY OF THE PROJECT 3 JUSTIFICATION ABOUT THE METHOD USED TO EVALUATE THE PROJECT 4 OTHER FACTORS THE COMPANY MIGHT CONSIDER 6 CONCLUSION 7 Reference List 9 Appendix 10 INTRODUCTION This report analyses one of the projects that Salsbury is analyzing to invest…
The other option that Salsbury has is to open a health and fitness complex and it has a NPV of ?700,000. Furthermore, the report justifies the technique that has been used in order to evaluate the project by comparing it with other project evaluation techniques such as Accounting Rate of Return and Profitability Index. Moreover, the report then discusses other factors that the organization needs to consider while making the investment decision. ANALYSING THE FEASIBILITY OF THE PROJECT Net present value (NPV) is the technique that has been used to analyze the feasibility of the project. NPV shows the net future cash flows of the project after being discounted with the discount rate so that the present value or present worth of the cash flows can be calculated (McLaney, 2009). In the appendix 1 of the report, the forecasted cash flows for the 10 years are calculated and net present value of these cash flows are calculated with the discount rate of 14%. ...
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