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Project Conception and Appraisal - Lect III
Project Conception and Appraisal - Lect III
Unit-III
Market Appraisal
• Consumer behavior
• Distribution channels
• Power plants
• Level of risk as evidenced by the worst and best values of cost and revenues
• Cost of capital
• Source/ Interest rate
• Projected profitability
• Breakeven point
• Investment worthwhile ?
• Net present value (NPV)
• Internal rate of return (IRR)
• Payback period
• Loan returning capability
• Debt service coverage ratio (>2- desirable)
Sample Project
Suppose a project has the following data:
• Estimation of investment, yearly costs and revenues to obtain gross cash flows.