Pathways to Higher Education Project   Center for Advancement of Postgraduate  Studies and Research in Engineering Sciences, Faculty of Engineering - Cairo University (CAPSCU)

Economic Feasibility Studies

Dr. Ashraf El-Sharkawy

 

Summary of the Training Material   This training material covers the feasibility study of new investment projects. The material illustrates the different types of feasibility studies with an emphasis on the economic appraisal of any new investment project. The material is divided into three main units, proceeding from the basic to the advanced. All units emphasize the firms’ goal of wealth maximization, and deal with aspects of capital budgeting which help to achieve this goal. Each Unit is designed to include some training goals to be achieved by the end of the unit. In addition, each unit contains some real life examples. The material ends with a guideline for project analysis.

 

Table of Contents

 

            Acknowledgement and Foreword

Chapter 1: Feasibility Studies: An Overview 1.1 Introduction 1.2 Types of Feasibility Studies 1.3 Long-Term Investment Analysis 1.4 Cash Flows 1.5 Essential Formula in Project Appraisal

Chapter 2: Capital Budgeting Techniques 2.1 Introduction 2.2 The Net Present Value Method 2.3 The Payback Period Rule 2.4 The Discounted Payback Period Rule 2.5 The Average Accounting Return Rule 2.6 The Internal Rate of Return (IRR) Rule 2.7 The Profitability Index (PI) Rule 2.8 The Practice of Capital Budgeting

Chapter 3: Risk Analysis 3.1 Introduction: What is risk? 3.2 Handling Risk 3.3 Using a Risky Discount Rate 3.4 Defining a Risky Discount Rate 3.5 Calculating a Risky Discount Rate 3.6 The Certainty Equivalent Method: Adjusting the Cash Flows to their ‘Certain’ Equivalents 3.7 Analysis under Risk: Summary 3.8 Project Decision Analysis (Guide Lines)