Financial Feasibility Assessments. Building and Using Assessment Models for Financial Feasibility Analysis of Investment Projects

Abstract

This thesis examines how assessment models can be built and used for financial feasibility analysis of investment projects. An overview of financial feasibility assessment methods is presented, as well as a general assessment model, which can be used as a base when constructing new models. Risk analysis methods are introduced, as uncertainties can highly affect the outcome of the assessment. A new optimization method used to estimate financing requirements of investment projects is presented, as well as a new method to predict the optimal year to sell the investment. A case study is used to illustrate the use of a model to assess the financial feasibility of a geothermal cogeneration plant. The conclusion is that Net Present Value, Internal Rate of Return and Modified Internal Rate of Return should be used to assess financial feasibility of investment projects. In addition to calculating the financial feasibility criteria, assessment models should allow the user to perform sensitivity analysis, scenario analysis, and simulation to analyze risk associated with the investment project.