The level project feasibility
Different methods of valuation are used differently to measure the level project feasibility. From the results of such different approaches, an investor can then evaluate the worth of his investment project in terms of benefits and losses. Income valuation is the process of valuing an investment project by analyzing the scope and level of income, which would be provided by a particular investment. It tries to estimate the level of investment cost expenditure and the corresponding level of income.
Only projects which depict higher incomes outcome than the cost level would be viable. (Shannon, Robert, 2000) Elsewhere, market valuation is the analysis of investment project mainly liquid assets though the corresponding relationship of market demand and supply. It is achieved through analyzing the status of the market conditions of investment in terms of product service demand against a pattern of both political and economic risks. It assigns investments some specific market prices depending on the market conditions.
Cost valuation approach is the analysis of project feasibility through evaluating the cost variables. Since costs are important components in any investment, their valuation would be of high importance in setting out the most optimal costing levels that would be profitable for an investment. Projects valuation involve the use of various methods such as cost benefit analysis, benefits cost ratio, net present value above others. (Shannon, Robert, 2000)
However, in the above three approaches, the income valuation would perhaps be the most appropriate. This is in the manner of implications that it has towards business profit levels which is a major investment objective. A standard level of valid income would give the investor a reasonable capacity in decision making on whether to enter in a certain project or not. Elsewhere both cost and market variables are part of income valuation.
Shannon, P & Robert, P (2000) Valuing a Business. New York, McGraw Hill