#### Introduction ![images (1) (24).jpeg](https://cdn.steemitimages.com/DQmeGXDFUXGzyoYhcot2iWk5td5N2wWurvsdp1exusix9Z9/images%20(1)%20(24).jpeg) [Link](https://images.app.goo.gl/kCu3sYFjP8KV5ghm6) Before diving into the meanings of financial investment and project evaluation, we have to define so terms that align with the concepts of investment and evaluation. **Investment** in simple and clear terms is "pledging one's resources and keeping them for unforeseen opportunities that might occur in the future." Concepts of investments include financial and economic investment. While **economic investment** refers to remunerative actions taken to boost, advance, and control the advantageous aspect of the existing stock of capital, **Financial investment** forms the bane of our topic of discussion. #### Financial Investment ![images (1) (25).jpeg](https://cdn.steemitimages.com/DQmSpfeE8a4qbAcs2PnnXDHTDtEztr78dcR5Pr9rHhkpJdL/images%20(1)%20(25).jpeg) [Link](https://images.app.goo.gl/5tigYXTAxhoq3BRm9) This attributes to a swap of monetary demands that is investments that yield monetary returns such as real estate, mortgage, stocks, and bonds. The assets under this investment umbrella are vague. ###### Notable Differences Between Economic Assets and Financial Assets Economic Assets | Financial Assets - | - Tangible Goods | Intangible Goods Buildings | Stocks, and Bonds Machinery | Real Estate Vehicles | Mortgages Breeds Proceeds | Financial Claims from Economic Assets #### Project Evaluation ![images (1) (28).jpeg](https://cdn.steemitimages.com/DQmasi2iH9Np6nZtw7UMjpUTX7ce96n2TqVNi7kTnmUrqr1/images%20(1)%20(28).jpeg) [Link](https://images.app.goo.gl/YWLAY9uyNMvTUbhZ6) A **project** entails the purchase of individual immovable physical resources or an association of interconnected assets that fulfills a manufacturing or initiated procedure. **Project Evaluation**, therefore, ascribes to the penetrating stages of a project to determine its pragmatism. ###### Importance of Project Evaluation * Project appraisal targets the awareness of how to construct the project to beat meet its desired standards or ethics. * It magnifies and enlarges eventual dynamism alongside lessons imbibed. * Project valuation drives towards the enhanced height of transmission, deducible backing, network expiation, and lots more. * It involves the appraisal of mensurable and partial knowledge. * Evaluation of these projects entails the committing of cumbersome quantities of funds and valuation on how to originate it. * Most projects before commencing are perceived to be irretrievable, therefore, it needs to be accurately appraised to restrict lapses. #### Distinction between Investment, Gambling, Savings and Speculation ![images (1) (29).jpeg](https://cdn.steemitimages.com/DQmWRThy8NQyhtFYWmwyQ3RC9WfGoudyCURSa4CgZfyUkq1/images%20(1)%20(29).jpeg) [Link](https://images.app.goo.gl/jLe9oFYgbojctu8t9) **Investment** as earlier defined is "pledging one's resources and keeping it for unforeseen opportunities that might occur in the future." **Gambling** associates itself with risk-taking and uncertainty. It pertains to involving in a hazardous activity with the aspiration of a favorable outcome. **Savings** is keeping away funds from a proportion of your earnings for unforeseen circumstances or to secure it against necessities that might occur. **Speculation** is the purchasing of valuables or monetary apparatus with the aspiration that the price will escalate in subsequent times. #### Fundamentals of Project Evaluation ![images (1) (30).jpeg](https://cdn.steemitimages.com/DQmWJVZdMhqe1Lo5J7GGVjfRFBruCMcw4JMBdNYNQUVrR67/images%20(1)%20(30).jpeg) [Link](https://images.app.goo.gl/o84GcTEdwuJ7AnHq8) --- ###### A. Elements of Project Evaluation ------ * The existence of fathomable principles. * The presence of substitutes. * Repression. * Predicting. * Decision on selected substitutes. ----- ###### B. Situations that needs project evaluation ------ **A. Introduction of a New Proposal** When a shareholder deliberates on this proposal, he or she is expected to come to a favorable conclusion. This decision includes buying tangible assets to carry out the project deliberated on. **B. Expansion of a New Project** This involves the decision to broaden the scope of the project into divisions such as office branches or warehouses within the country or state of establishment. **C. Advancement in Mechanisation** The world is in a constant state of change and as such decision-makers see the need to periodically evaluate projects to suit the current state of technology. **D. When tackling Modification Resolution** It concerns the preference to continue using a piece of particular equipment or replace it entirely by selling the old one at a scrap value. Shareholders can also decide to maintain the old machines, and add new ones to increase productivity. #### Classification of Projects It can be classified on different basis such as; **1. Degree of Investment** This looks at the funds invested into the business which is assumed to take care of starting the business till it starts yielding returns. **2. Description of the Proposal** Under this classification, we have two basic categories. It's categorized as a financial or non-financial project based on its degree of returns. **3. The gestation period of the project** The time is taken into consideration to carry out the proposal. It could be a short, medium, or long-term proposal. **4. Relationship with other indistinguishable projects** Here, we have Mutually Exclusive Projects and Dependent Projects. **Mutually Exclusive Projects** are those projects in which the approval of one terminates the others. **Dependent Projects** involves taking up two projects that depend on each other. **5. Immanent Dangers** Every project has its own risk associated with it. It's always faced with risks of loss or theft. However, there are risk-reduced projects which are an investment in government securities. **6. The conventionality of the Project** Projects can be conventional or non-conventional which solely lean on the timing and arrangement of the project. For **conventional** projects, the flow of cash is either in the manner of outflow following a series of inflows and vice versa. For **non-conventional** projects, the series cash flows are not in an orderly manner. #### Project Cycle ![images (1) (31).jpeg](https://cdn.steemitimages.com/DQmcVZAVWMAhjtazDeto36Pzvtfw4ZTTb896pKNwuC8efzG/images%20(1)%20(31).jpeg) [Link](https://images.app.goo.gl/DCH9tk1kmFDx6TYk8) This involves the mishmash of the series of stages involved in the life cycle of a project starting from the structure to the finishing touches. These stages are: - Incubation Period - Comparison Stage - Acquisition of required data - Evaluation Stage - Ranking and Selection - Implementation Stage - Monitoring and Control #### Facets of Project Evaluation **Market Evaluation** This concerns itself which questions regarding demand and supply and how the supply and distribution chain works in the market. **Technical Evaluation** This analysis seeks to arbitrate if the precondition for the achievement of the project has been fully approved and decided upon. **Financial Evaluation** This analysis investigates if the project will be financially stable to maintain a successful kick-off in other to yield estimated returns. **Economic Evaluation** This concerns itself with deciding on a project from the bigger social and benefits point of view. That is the economy of a country's point of view. **Environmental Evaluation** This analysis is carried out to know whether the environment will pose a threat to the business intended to be established. #### Conclusion Investment in real or financial assets can take various models ways as outright buying new apparatus or office space, opening a new branch within the business environment, and upright or parallel assimilation in the assembling procedure. **Upright** in this sense means expansion of the business in terms of branches. **Parallel** here means acquiring other minor firms operating in the same line of business as the acquiring firm.