| An investment decision may take the form of | | | | be investigated to ask appropriate questions related |
| making changes in existing products, introducing new | | | | to their projects and to enhance the skills of |
| products, integrating backward or forward. | | | | participants to carry out simple studies. |
| It may also involve buying new equipment, installing a | | | | CONCEPT DEFINED. Process of gathering Data- It is |
| new plant, leasing an equipment, expanding | | | | the process of generating data related to a new |
| operations, buying over an existing company or even | | | | project or an investment proposal and drawing |
| divesting. Every investment involves a cost outlay, | | | | appropriate conclusions in the light of data collected |
| expected cash outflows and inflows, an opportunity | | | | and the values of the project promoters; An Enquiry- |
| cost of capital and a desired level of return on | | | | feasibility study is an enquiry which consists of |
| investment. | | | | putting down on paper in quantitative terms the |
| To minimise the risk usually associated with | | | | anticipated operations of a proposed project, |
| investment and to make the most effective use of | | | | whether this project be an extension of old facilities, |
| scarce resources, it is extremely necessary to | | | | a joint venture with another company or |
| determine the feasibility and viability of business | | | | government, the purchase of new machine tools and |
| ventures to be embarked upon. The large-scale | | | | squipment, etc; |
| project involves a higher risk level and has more need | | | | Document or Report- It is also a document or report |
| for project feasibility studies. Feasibility studies | | | | which shows with a minimum of bias the project |
| therefore form an integral part of developing medium | | | | being studied in a logical and orderly fashion and the |
| and large-scale projects. | | | | investigation carried out on an enterprise or project |
| Most micro and small scale projects and activities | | | | as it relates to the feasibility of undertaking the |
| embarked upon need perhaps very small level of | | | | project and its commercial viability. Preliminary |
| capital. They may not involve feasibility studies in the | | | | Surveys- Note that a feasibility study is undertaken |
| strict sense of it. partly because the project | | | | after preliminary surveys and appraisal (prefeasibility |
| promoters cannot afford them. Even then the need | | | | studies) have led to the selection and formulation of |
| to answer pertinent questions on such projects | | | | a business idea. |
| cannot be overstressed. The objective is to raise the | | | | The feasibility study is therefore a screening process |
| consciousness of investors to undertake feasibility | | | | to determine the quality and appropriateness of this |
| studies on their projects to identify key factors to | | | | investment or initiative. |