Analyzing Project Feasibility Research Paper Example | Topics and Well Written Essays - 500 words

Analyzing Project Feasibility - Research Paper Example The firm may want to maintain the independence of its business when making such investment decisions. Consequently, the choice of the criterion may be based on the availability of personnel resources, time and expertise required to analyze the project as well as the capital constraints that make the liquidity of a project a principal issue (Joos & Zhdanov, 2008). Dell Corporation is a large firm that has its operations based on the manufacture of electronic items; particularly computers (desktops and laptops). In the determination of the feasibility of its projects, Dell Corporation estimates the cash flows and net present value as + $10. The recognition or dismissal of the venture is dependent on the type of analysis that the corporation adopts (Danielson & Scott, 2006). The best type of analysis that can be used to regulate the practicability of the project is the discounted cash flow analysis method. The discounted cash flow analysis method is a project valuation method that applies the time value of money concept, particularly in relation to the estimation of the investment opportunity. This method is essential in the case of Dell Corporation given that it will use the future cash flow projections to attain the present value by discounting by discounting the values, mostly by the weighted average cost of capital (WACC) (Danielson & Scott, 2006). This method works in the manner that if the project’s value is higher than the current investment cost, the project may be a good one for Dell Corporation to invest. Subsequently, the method conveys certain essential economic information about the firm under certain circumstances such as when faced by the issue of capital constraints. Besides, the corporation’s use of the method will be justified by the fact that the firm has always been changing its product lines. The discounted cash flow analysis is quite useful in the assessment or evaluation of the project given that, in this case, it would be quite easy