General Studies · Project Appraisal
A large textile unit is seeking a loan for modernization. During the site visit, the bank's technical officer notices that the machinery being replaced is only 3 years old, whereas the industry standard for replacement is 10 years. The borrower claims the new machinery is 50 percent more energy-efficient. How should the lender handle this in the project appraisal?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Request the borrower to sell the old machinery below market price to expedite processing.
- 2Approve the loan immediately because technological modernization is always beneficial.
- 3Verify the energy-efficiency claims through a certified energy auditor and evaluate the Cost-Benefit Analysis.✓
- 4Reject the loan application because replacing relatively new machinery indicates financial waste.
Correct answer
Verify the energy-efficiency claims through a certified energy auditor and evaluate the Cost-Benefit Analysis.
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