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Feasibility Studies and Project Evaluation

Description: This quiz covers the concepts and techniques used in feasibility studies and project evaluation. It includes questions on various aspects such as project identification, analysis, and selection, as well as the evaluation of project outcomes.
Number of Questions: 15
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Tags: feasibility studies project evaluation project management investment analysis
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What is the primary purpose of a feasibility study?

  1. To assess the technical feasibility of a project

  2. To evaluate the economic viability of a project

  3. To identify potential risks and challenges associated with a project

  4. To determine the social and environmental impact of a project


Correct Option: B
Explanation:

A feasibility study is conducted to assess the economic viability of a project by analyzing its costs, benefits, and risks. It helps decision-makers determine whether the project is worth pursuing.

Which of the following is not a common type of feasibility study?

  1. Technical feasibility study

  2. Economic feasibility study

  3. Market feasibility study

  4. Environmental feasibility study


Correct Option: D
Explanation:

Environmental feasibility studies are not typically conducted as part of a feasibility study. Instead, they are usually carried out as a separate assessment to evaluate the environmental impact of a project.

What is the main objective of a market feasibility study?

  1. To assess the technical feasibility of a project

  2. To evaluate the economic viability of a project

  3. To identify potential risks and challenges associated with a project

  4. To determine the size and characteristics of the target market


Correct Option: D
Explanation:

A market feasibility study aims to determine the size and characteristics of the target market for a product or service. It helps businesses understand the demand for their offering and assess the potential for success.

Which of the following is not a common method used in project evaluation?

  1. Cost-benefit analysis

  2. Payback period

  3. Internal rate of return

  4. Net present value


Correct Option: B
Explanation:

Payback period is not a common method used in project evaluation. Instead, cost-benefit analysis, internal rate of return, and net present value are widely used techniques for evaluating the economic viability of projects.

What is the primary purpose of a cost-benefit analysis?

  1. To assess the technical feasibility of a project

  2. To evaluate the economic viability of a project

  3. To identify potential risks and challenges associated with a project

  4. To determine the social and environmental impact of a project


Correct Option: B
Explanation:

A cost-benefit analysis is conducted to evaluate the economic viability of a project by comparing its costs and benefits. It helps decision-makers determine whether the project is worth pursuing.

Which of the following is not a common type of cost-benefit analysis?

  1. Incremental cost-benefit analysis

  2. Average cost-benefit analysis

  3. Marginal cost-benefit analysis

  4. Total cost-benefit analysis


Correct Option: B
Explanation:

Average cost-benefit analysis is not a common type of cost-benefit analysis. Instead, incremental, marginal, and total cost-benefit analyses are widely used techniques for evaluating the economic viability of projects.

What is the main objective of an internal rate of return (IRR) calculation?

  1. To assess the technical feasibility of a project

  2. To evaluate the economic viability of a project

  3. To identify potential risks and challenges associated with a project

  4. To determine the social and environmental impact of a project


Correct Option: B
Explanation:

An IRR calculation is conducted to evaluate the economic viability of a project by determining the discount rate at which the net present value of the project's cash flows is equal to zero. A positive IRR indicates that the project is economically viable.

Which of the following is not a common method used in project selection?

  1. Weighted scoring model

  2. Payback period

  3. Internal rate of return

  4. Net present value


Correct Option: B
Explanation:

Payback period is not a common method used in project selection. Instead, weighted scoring models, internal rate of return, and net present value are widely used techniques for selecting projects.

What is the main objective of a weighted scoring model in project selection?

  1. To assess the technical feasibility of a project

  2. To evaluate the economic viability of a project

  3. To identify potential risks and challenges associated with a project

  4. To rank projects based on their overall attractiveness


Correct Option: D
Explanation:

A weighted scoring model is used in project selection to rank projects based on their overall attractiveness. It involves assigning weights to different project attributes and then scoring each project based on its performance in each attribute.

Which of the following is not a common type of risk assessment technique?

  1. Sensitivity analysis

  2. Scenario analysis

  3. Monte Carlo simulation

  4. Decision tree analysis


Correct Option: D
Explanation:

Decision tree analysis is not a common type of risk assessment technique. Instead, sensitivity analysis, scenario analysis, and Monte Carlo simulation are widely used techniques for assessing project risks.

What is the main objective of sensitivity analysis in project evaluation?

  1. To assess the impact of changes in project parameters on project outcomes

  2. To identify potential risks and challenges associated with a project

  3. To evaluate the economic viability of a project

  4. To determine the social and environmental impact of a project


Correct Option: A
Explanation:

Sensitivity analysis is used in project evaluation to assess the impact of changes in project parameters, such as costs, revenues, and discount rates, on project outcomes, such as net present value and internal rate of return.

Which of the following is not a common type of project evaluation report?

  1. Feasibility study report

  2. Project appraisal report

  3. Project monitoring report

  4. Project completion report


Correct Option: C
Explanation:

Project monitoring reports are not typically considered as project evaluation reports. Instead, feasibility study reports, project appraisal reports, and project completion reports are common types of project evaluation reports.

What is the main purpose of a project completion report?

  1. To assess the technical feasibility of a project

  2. To evaluate the economic viability of a project

  3. To identify potential risks and challenges associated with a project

  4. To document the project's outcomes and lessons learned


Correct Option: D
Explanation:

A project completion report is prepared at the end of a project to document the project's outcomes and lessons learned. It provides a comprehensive overview of the project's performance, including its achievements, challenges, and recommendations for future projects.

Which of the following is not a common type of project evaluation technique?

  1. Cost-benefit analysis

  2. Payback period

  3. Internal rate of return

  4. Net present value


Correct Option: B
Explanation:

Payback period is not a common type of project evaluation technique. Instead, cost-benefit analysis, internal rate of return, and net present value are widely used techniques for evaluating the economic viability of projects.

What is the main objective of a project monitoring and evaluation system?

  1. To assess the technical feasibility of a project

  2. To evaluate the economic viability of a project

  3. To identify potential risks and challenges associated with a project

  4. To track project progress and assess project outcomes


Correct Option: D
Explanation:

A project monitoring and evaluation system is used to track project progress and assess project outcomes. It involves collecting data on project activities, outputs, and outcomes, and using this data to assess the project's performance and identify areas for improvement.

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