Capital Budgeting Decision : Should PD. Kebersihan Bandung Expands Service to Medical Waste Transport ?

• Main Author: Yuniarti 29116415, Delia
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/26466
• Institution: Institut Teknologi Bandung

Bandung is a big city with adequate health care facilities that potentially produce huge of medical waste and other toxic (B3) hazardous waste. KPK has state that Bandung is categorized as emergency for medical waste and need medical waste transporter to distribute the waste to the plant. Currently the market has lose its market leader because of violation. PD Kebersihan see the issue as an opportunity to add new service line to their business. This project is intended to provide the financial feasibility of expanding their business to medical waste transport service. Different with conventional waste transporter service, medical waste are required special treatment since it contains hazardous waste. The financial feasibility is projected in 5 years (2018 – 2022). The final aspects calculated are NPV, IRR, Payback Period, and Profitability Index in order to making the decision. Other assumption to help author to mitigate the risks is the sensitivity analysis towards medical waste volume and terminal growth. <br /> <br /> The result from the feasibility study of Medical Waste Transportation Service are : Net Present Value (NPV) is Rp. 1.746.231.818, Internal Rate of Return (IRR) is 14,94%, Payback Period is 4 years and 2,20 month, and the profitability Index is 1,06. Based on sensitivity analysis on the sales growth, beta, risk free rate, market return, and terminal growth towards the NPV, the company will obtain a positive NPV. Beta, risk free rate, and market return does not affect the NPV as much as sales growth. From Monte Carlo Simulation with a 95% confidence level, the sales growth can give a fluctuating NPV range of (Rp. 2.123.947.756) to Rp. 5.617.192.086. From the result above, it is concluded that the project is feasible to be conducted. The company should maintain the sales growth which give a large impact on their revenue. <br /> <br />