Project Evaluation

  • Reference: FN-650-E

  • Number of pages: 9

  • Publication Date: Mar 1, 2022

  • Source: IESE (España)

  • Type of Document: Technical Note

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Description

Project evaluation (also known as capital budgeting or project analysis) is the process that a business undertakes to evaluate potential projects or investments. Essentially, it is based on a cost-benefit analysis in order to determine if the benefits of a project are larger than its costs. This note provides the main concepts related to project evaluation that managers should know and includes the main tools to the decision-making process.

Learning Objective

Note to prepare the discussion of cases on project evaluation.

Keywords

Capital budgeting Cost-benefit Analysis DCF discount rate. discounted cash flows equity cash flowa free cash flows internal rate of return IRR mutually exclusive projects net present value NPV payback perpetuity project analysis Project evaluation