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The best tool to evaluate any investment is by its cash-flow predictions and NPV (Net Present Value) analysis. Net Present Value is the current monetary value of the cash inflows less outflows over the course of the investment. Market prevalent rates must be used to discount the cash flows.
Any investment that has a positive NPV should be considered (Higher the better).
Apart from that industry beta risk should also be considered.
The best practice investment analysis tool is COMFAR Expert III developed by UNIDO. You could follow UNIDO Project Evaluation Manual it is available on line to UNIDO website.
Actually, there is no exact specific tool for evaluation as this is subjective in nature. However, the evaluation can be done by comparing the investment with the same investment (like wise) or with the industry standard. For this, there should be benchmark to whom we can make comparison.
Another thing is that we should divide the whole investment feasibility into measurable milestones where we can evaluate the investment objectives with the actual results of that milestone.
Also, there should be ongoing review of the investment's assumptions & estimates on which the inflow & outflow of the investment lies. we should be proactive in our approach and change our assumptions if require.
