Financial feasibility is the correct answer.
Explanation:
Financial feasibility study is conducted to project how much start-up capital is needed, sources of capital, returns on investment, and overall financial viability of a project. It assesses the financial aspects of the project and determines whether it is economically viable and sustainable. Here are the key points to support this answer:
1. Financial analysis: A financial feasibility study involves conducting a detailed analysis of the project's financials, including revenue projections, cost estimates, and profitability analysis.
2. Start-up capital requirements: The study determines the amount of capital needed to initiate the project, considering factors such as equipment, infrastructure, inventory, and working capital requirements.
3. Sources of capital: It identifies potential sources of funding for the project, such as loans, equity investments, grants, or self-funding. This helps in assessing the availability and feasibility of obtaining the required capital.
4. Return on investment (ROI): The study calculates the expected returns on investment by estimating the project's revenue generation and comparing it with the initial capital investment. It helps in evaluating the profitability and attractiveness of the project.
5. Cost-benefit analysis: Financial feasibility study involves conducting a cost-benefit analysis to determine whether the project's potential benefits outweigh the costs. It helps in assessing the project's economic viability and potential profitability.
6. Financial indicators: Various financial indicators, such as payback period, break-even analysis, net present value (NPV), and internal rate of return (IRR), are calculated to assess the project's financial feasibility and profitability.
Therefore, financial feasibility study plays a crucial role in evaluating the financial viability and sustainability of a project by analyzing the required capital, sources of funding, expected returns on investment, and overall financial aspects.