evaluation of a contemplated project or course of action, according to preestablished criteria (such as Net Present Value (NPV), Internal Rate of Return (IRR), and payback) to determine if the proposal meets management requirements. An analysis is also made of alternative means of accomplishing the task.
determination of the likelihood that a proposed product or development will fulfill the objectives of a particular investor. For example, a feasibility study for a proposed housing subdivision should: (1) estimate the demand for housing units in the area; (2) estimate the absorption rate for the project; (3) discuss legal and other considerations; (4) forecast cash flows; and (5) approximate investment returns likely to be produced.
a determination of the likelihood that a proposed development will fulfill the objectives of a particular investor.
Example: A feasibility study of a proposed subdivision should:
- estimate the demand for housing units in the area
- estimate the absorption rate for the project
- discuss legal and other considerations
- forecast cash flows
- approximate investment returns likely to be produced
