Financial Feasibility

1. The ability of a proposed land use or change of land use to justify itself from an economic point of view. 2. One of but not the only test of the highest and best use of land because it does not necessarily make it the best use of the land. Example: A proposed small office building will cost $1 million to build, including direct costs and indirect costs. It is expected to generate $150,000 in annual net operating income. Building investors require a 12% rate of return on the $1 million investment, or $120,000, so this project is financially feasible.