Feasibility study of rental projects by Allied Rental Modarba Pvt Ltd

Abstract

The main purpose of this study is the application of learned knowledge throughout the whole degree and getting the knowledge about the feasibility study of project either it will be practicable or not. It is done with cooperation of Allied Rental Modarba Pvt Ltd situated in Islamabad so that we got able to do this project. In this study the feasibility study of rental projects is done to come up with the results finding out that the projects any organization going to do are profitable or not. Capital budgeting of rental projects is done to find out how much start-up capital is needed, sources of capital, returns on investment, and other financial considerations. It looks at how much cash is needed, where it will come from, and how it will be spent. In order to increase their production in Pakistan to compete with others in market Allied Rental Modarba Pvt Ltd is trying to gain more market shares. This study shows the feasibility studies of two rental projects and it enabled organization to take choice which is good for the company. For the two rental projects for Khawja Float Glass Pvt Ltd and Gudoon Textile Mills Pvt Ltd the cash flow statements, NPV, IRR, payback period and profitability index are calculated to get the best choice for ARM to go for. After calculating these financial feasibility components it is concluded that Khawja Float Glass Pvt Ltd is best to take this project on the field. Khawja Float Glass Pvt Ltd has positive net present value of Rs 1,683,164 and Gudoon Textile Mills Ltd has negative net present value of Rs (914,587). The other calculations of feasibility study are also matching up with Khawja Float Glass Pvt Ltd as IRR for this is 18% which is lower than the discount rate and it is acceptable for the organization. IRR for Gudoon Textile Mills Pvt Ltd is 15% which is higher than the discount rate resulted that the project is to be rejected by the organization to take on. The payback period for the Khawja Float Glass is 2.413 years and for Gudoon Textile is 2.439 years. It also shows that first project is better than the second project for the Allied Rental Modarba Pvt Ltd because the payback period for the first project is less than the second one. According to this feasibility study of these rental projects for the Khawja Float Glass Pvt Ltd and Gudoon Textile Mills Ltd, it is recommended on the basis of above mentioned calculated results of feasibility components that ARM should go for the Khawja Float Glass Pvt Ltd to get more profit because results indicates as it more feasible and beneficial for the company to go for it.