PROJECT APPRAISAL

Project Appraisal

Project Appraisal

NPV

Project should be rejected as the NPV of project is less than 1. As per the calculations attached in excel sheet, we can easily say that project is not suitable one for the company. We have analyzed the given cash flows of project using techniques such as Net Present Value (NPV). The reason for analyzing two projects by multiple techniques is to increase the reliability and authenticity of our forecast. From the following table, we can easily see that Net Present Value of Project is less than 1. We reject the project having value of NPV because higher the NPV, greater would be the returns and profitability of the project.

Year

Inflow

Outflow

Cash Flow

0

30000000

-30000000

1

10000000

6000000

4000000

2

10000000

6000000

4000000

3

10000000

6000000

4000000

4

20000000

10000000

10000000

5

20000000

10000000

10000000

6

20000000

10000000

10000000

7

20000000

10000000

10000000

8

20000000

10000000

10000000

9

20000000

10000000

10000000

10

20000000

10000000

10000000

$400,450.79

NPV

($29,599,549.21)

An approach utilised in capital making allowance for where the present value of money inflows is subtracted by the present worth of money outflows. NPV is used to analyze the profitability of an investment or project. NPV compares the worth of a dollar today versus the worth of that identical dollar in the future, after taking inflation and come back into account. If the NPV of a prospective task is affirmative, then it should be accepted. However, if it is contradictory, then the task likely should be turned down because cash flows are negative.

Associated Risks

An very simple way to decrease risk is to have less determined goals. After evaluating the risks, you can choose a way to avoid or reduce these risks and risk management. If we understand the risks in a project, we can decide what risks are acceptable and take action to mitigate or avoid those risks. If our project risk assessment determines the risks are too high, you may want to consider the proposed restructuring within acceptable risk levels.

The risks that do not offer the possibility of profit (profit?) Should be avoided. The ...