The previous chapter introduced the concept of feasibility studies as an example of systems analysis and economic modelling. This chapter discusses feasibility studies as an example of investment appraisal applied to construction projects. Similar techniques are used in a variety of different contexts, such as investment in new plant and equipment, or in shares in the stock market. The basic questions facing every investor are whether or not the investment will be worth more than the amount invested, and if so, by how much? Alternatively, an investor may need to know the probable rate of return on an investment to compare it to the rate of interest to be paid on loans to finance the project.
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