Practical No 14: Importance of A Financial Feasibility Study

Practical No 14
Title:- Prepare financial feasibility report of a chosen

product\service
Practical significance:- This practical explain how to
write the financial feasibility report
Relevant program outcomes(po’s):- po1 , po3, po5,
po9, po10
Competancy and practical skills:- To develop the
knowledge how to write financial feasibility report
Relevant course outcomes (Co’s):-Use the support
systems to zero down to your business idea
Brief theory:- Importance of a Financial Feasibility Study

There are many important factors that any feasibility study
should address, and in the financial or economic studies this
is equally true. A financial feasibility study can concentrate
on a variety of projects or developments or can focus one
specific area or study. In any finance study, particularly if
one is seeking to raise capital from a bank or private
backers, the basic minimum of any financial report (and
business plan as well) should be to cover the following:
 How much capital ones needs to begin the business;

 How much capital ones needs to operate the
business;
 ROI or return on investment, i.e. when will investors
see their money back with a return.
 A feasibility study is simply an assessment of the
practicality of a proposed plan or method.
Finally, here is an outline for the nine parts of a feasibility
report:
1. Executive summary
2. Description of product/service
3. Technology considerations
4. Product/service marketplace
5. Marketing strategy
6. Organization/staffing
7. Schedule
8. Financial projections
9. Findings and recommendations
1 EXECUTIVE SUMMARY
The Stimson Mill Site, located adjacent to the Spokane River, was
used for lumber mill operations for more than 100 years (See Figure
1). In 2005, Stimson Lumber closed. The Stimson Mill Site was
acquired by Blackrock Development in 2006, foreclosed by
Washington Trust Bank in 2013 and later sold in three large parcels.
The 21-acre parcel (“Rivers Edge”) and 3.8-acre parcel (“Triangle
Piece”) were acquired by Douglass Properties and are still owned by
Douglass entities (See Figure 2). The City is in discussions with
Douglass to trade the City parcel that crosses the Rivers Edge parcel
for the Triangle Piece and a 40-foot waterfront public easement.
2.INTRODUCTION
The City and ignite cda completed the Atlas Site Master Planning
process that resulted in a development plan . The master planning
process, including community engagement efforts, are summarized
in the Atlas Site Waterfront Improvement Project Master Plan
(“Master Plan”). The Master Plan is intended to achieve the following
objectives: 1. Fund the Atlas Site land purchase, site remediation and
infrastructure and public space improvements through land sales and
TIF. 2. Preserve the waterfront land area as public space. 3. Create a
unique and desirable addition to the City.
3.1 MARKET ASSESSMENT
As the basis for the financial model, to determine the funding to be
generated by land sales of developed property and the TIF from the
developed property value, Heartland conducted a Residual Land
Value analysis (“RLV Analysis”) for the specific land uses that are
planned for the Atlas Site. RLV Analysis is a useful method for
calculating the amount a developer can pay for land given the
assumed value of the development, the assumed project costs, and
the developer’s desired profit. These values are calculated in 2018$.
The assumptions related to each of these components used for the
Atlas Site are described in more detail below and the full set of
inputs for each use are listed
3 FINANCIAL ANALYSIS
Based on the RLV analysis and the Development Phasing Timeline,
site development costs, and programmatic assumptions, the
consultant team worked to develop a financial model that would
show on a quarterly basis that projected revenue for the
redevelopment of the Atlas Site would cover the projected site
development costs, including the public space. The financial model
framework is shown in Appendix 6.4 and the annual cashflow model
is shown in Appendix 6.6. In this model both costs, and revenues are
escalated at 2% per year to account for projected land specialization
and cost inflation.
4 DEVELOPMENT IMPLEMENTATION STRATEGY

FINANCING/URD To ensure that the funding sources cover all the
projected costs during the duration of the project cashflows were
developed on a quarterly basis for the project and for each of the
urban renewal districts. The annual project cashflows as well as each
of the district cashflows can be found in Appendices
5 RECOMMENDED IMPLEMENTATION STRATEGY

ORGANIZATION :-Based on conversations with ignite cda and
reviewing the projected cashflows generated by the project, the
Consultant Team recommends an implementation strategy in which
public funds are used for the City and ignite cda construction of the
public space and the major site development and infrastructure costs
supplemented with funds from land sales that are made at the block
level to various developers/builders to generate revenue . This
strategy is optimal as it minimizes the risk to the public, ensures
priorities of the development are met, and creates significant land
value that would be attractive to developers while also providing the
City and ignite cda the necessary revenue to accomplish its project
objectives. The following graphic depicts a framework that lays out
how to pursue this implementation strategy once the Atlas Project is
approved.
Result:- From this practical we have learned how to write

feasibility report .
Conclusion :- It is necessary for improving business.

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Practical No 14

Title:- Prepare financial feasibility report of a chosen

Brief theory:- Importance of a Financial Feasibility Study

 How much capital ones needs to begin the business;

9. Findings and recommendations

4 DEVELOPMENT IMPLEMENTATION STRATEGY

5 RECOMMENDED IMPLEMENTATION STRATEGY

Result:- From this practical we have learned how to write

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