What distinguishes a feasibility study from a capital budgeting model?
Understand the Problem
The question is asking to distinguish between a feasibility study and a capital budgeting model by evaluating different statements that describe their purposes and characteristics.
Answer
Feasibility study assesses project viability; capital budgeting evaluates financial returns.
A feasibility study assesses whether a project is viable by evaluating legal, financial, and technical feasibility, while a capital budgeting model is a financial analysis tool used to decide on major investments or projects by comparing the potential returns of various investments.
Answer for screen readers
A feasibility study assesses whether a project is viable by evaluating legal, financial, and technical feasibility, while a capital budgeting model is a financial analysis tool used to decide on major investments or projects by comparing the potential returns of various investments.
More Information
Feasibility studies often include a broad analysis covering more than just finances, such as legal and technical aspects, making them more comprehensive assessments early in project planning.
Tips
A common mistake is to assume both terms are purely financial analyses; feasibility studies cover broader aspects.
Sources
- Feasibility Study for Successful Project - ActiveCollab - activecollab.com
- Capital Budgeting: Definition, Methods, and Examples - Investopedia - investopedia.com
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