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NO HANDWRITTEN ANSWERS PLEASE Describe financial feasibility and why it is important.

NO HANDWRITTEN ANSWERS PLEASE

Describe financial feasibility and why it is important.

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Financial feasibility is an analysis with regards to a project or an investment proposal as to how much start-up capital or investment is required, what will be the different sources of capital (equity, bank borrowings, bonds etc.), and what will be the return on investment. In plain and simple words financial feasibility is a study that looks at cash needed for a project, the sources of cash and how the cash acquired will be spent on the project.

Financial feasibility is very important as it is on the basis of this evaluation and study that economic and financial viability of a new investment or a new project is determined. Financial feasibility tells us if a project or investment is economically justifiable. It should be noted that investments in new businesses and projects are made with the purpose of earning money and earning profits and financial feasibility analysis helps in determining whether the investment will earn money or not and if it will earn money and profits what will be the quantum of the return on the investment made.

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