You are required to design the project of “Sugar Mill” in the commercial area. You have to analyze the economic feasibility of project by the consideration of all financial indicators. Suppose values can be taken for calculation.

For establishing any business project we required to conduct feasibility study means project should be feasible or not in economic feasibility study we analyse the project which is considered is providing return or not.

For example we consider NPV method for economic feasibility study.

Cashflow in year 0=(200000)

Cashflow in year 1 =70000

2nd year =80000

3rd year =100000.

Discount rate is 10%.

Year cashflow Discount rate PV×Discount rate

0 200000.

1 70000 0.909 63630

2 80000 0.826 66080

3. 100000 0.751 75100

Present value of Cashflow=204810

NPV=Cashinflow-Cashoutflow

=204810-200000=4810.

So project give 4810 NPV so its good to invest in sugar mill project.