Accessible Car New Diesel Engine Project Financial Feasibility Analysis

The development of new type diesel engine project has a strategic significance. This paper made study on the indexes and methods of payoff period, net present value, internal rate of return and uncertainty analysis and applies them on the financial feasibility demonstration of new type diesel engine project of Tongda Automobile Company. The evaluation criterion is unscientific for the index of payoff period lacking concerns on the later stage benefit of the project and neglecting the influence of inflation. By using a method of equal annual value, the cash flow of each period is modified, and therefore complemented the shortage of neglect to the project later stage benefit. And by introducing into inflation rate, the amended payoff period is calculated. For the NPV method, the identification to cash flow is unreasonable and no uniform standard on the selection to discount rate in the general calculation process. Therefore, this paper defines cash flow objectively in view of the project and selects the loan rate and the project basic return rate as the appropriate discount rate to make NPV analysis scientifically. The method of internal rate of return is also an important way to judge the feasibility of the investment project. While usually the investment activities are not implemented once-for-all, thus multi-radixes phenomenon in the process of high equation happens, which will influence the judgment of the project feasibility analysis. By regulating deferent period cash flows, the calculation method of internal rate of return is modified. In this way, the cumbersome and multi-radixes phenomenon can be avoided evidently. The non-dynamic nature of the break-even-point analysis leads to some deficiencies. This paper considers the time value of capital from the dynamic angle; therefore the internal risk of the project will be clearer. The sensitive factors identification of the sensitive analysis often exist deviation; this paper selects some key sensitive factors to analyze other economic indexes. With comprehensive analysis, Tongda Automobile new diesel engine project is proven feasible in the indexes methods analysis on payoff period, NPV, IRR etc. Meantime, some modified indexes analysis also shows a potential risk within the project. Therefore, we should accept the feasibility of the project meanwhile improve these indexes and extend the application so that they can better serve for the practice.