Financial Feasibility Assessment of the Smart Eco-Friendly Backpacks Project in Mexico

Abstract

Objective:To determine the financial feasibility of the smart eco-friendly backpack project by calculating the discount rate and the internal rate of return, in order to support the decision to accept or reject the investment proposal.

Design/methodology/approach: Financial project evaluation based on a five-step methodology and the weighted average cost of capital.

Results: Initial investment of $ 564,420.00, with an analysis horizon of 8 years; discount rate of 12.32 %; internal rate of return of 147.12 %; net present value of $ 5,588,559.15; benefit-cost ratio of 1.20; benefit-to-initial-investment ratio of 10.90; and payback period of 0.92 years.

Limitations on study/implications: The results are based on the assumptions considered and may not be accurate under different conditions.

Findings/conclusions: All indicators satisfy the acceptance criteria; the financial assessment is positive, and the implementation of the project is recommended, as it presents an attractive investment opportunity.

Keywords: investment, evaluation, net present value, profitability, ecological backpack.