Question

Project appraisal is a/an

• A. Export analysis
• B. Expert analysis
• C. Profitability analysis
• D. None of these

Hint:

Project appraisal answers the question: "Is this project worth investing in?" The primary way to answer this for a commercial project is by analyzing its potential profitability and returns.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
The question asks to define or categorize 'Project Appraisal'. Project appraisal is the process of assessing and evaluating a project's viability in a systematic way before making a decision to undertake it.
Step 2: Analysis of Options:
Let's evaluate the given options in the context of project appraisal.

(A) Export analysis: This is a very specific type of analysis relevant only to projects that involve exports. It is not a general definition of project appraisal.

(B) Expert analysis: While project appraisal is indeed conducted by experts, this describes {who} does the analysis, not {what} the analysis is. It is a characteristic, but not the best definition.

(C) Profitability analysis: This is a core and essential component of almost every commercial project appraisal. The financial viability of a project is judged primarily by its ability to generate profits and positive returns (e.g., using techniques like NPV, IRR). While appraisal also includes technical, market, and social aspects, profitability analysis is central to the financial appraisal part. Among the given choices, it is the most significant and defining activity.

Step 3: Final Answer:
Given that profitability is a key criterion for judging the worthiness of a project, 'Profitability analysis' is the most fitting description of a central part of project appraisal among the choices. Therefore, (C) is the best answer.