A MONTE CARLO SIMULATION OF FINANCIAL FEASIBILITY OF THE WEST JAVA COFFEE INVESTMENT PLAN (CASE STUDY AT PT AGRO JABAR)

• Main Author: HARYANI - Nim: 29115189 , FRIDA
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/27411
• Institution: Institut Teknologi Bandung

<p align="justify">PT Agro Jabar is one of West Java owned enterprise which has main business in agro business. One of their objective is to preserve and even develop the excellent coffee from West Java, and takes an economic advantage from it. The company sets to build the coffee estate of Arabica type, build the processing plant until the coffee can be traded to customers, and develop strong coffee trading system in West Java. <br /> <br /> <br /> This research aims to assist PT Agro Jabar to know the financial feasibility of the company investment plan to build the coffee estate, build the processing plant, and run the operation; and to know the effect of uncertainties to the net present value of cash flows from the coffee business by using Monte Carlo simulation. In this research, the uncertainties consist of the volatility of initial investment cost, coffee production, coffee price, exchange rate, and inflation rate. <br /> <br /> <br /> After build the cash flows model from the coffee business and calculate the net present value of the cash flows, the author found that the investment plan of coffee business is financial feasible. Furthermore, the author also calculated the uncertainties impact to the cash flows model by Monte Carlo Simulation. The result showed that there is 82% possibility of having positive results and 18% possibility of having negative results out of a thousand cases from combined risks evaluation. Compared to the commonly acceptable risk of 5%, the 18% is quite big difference. There should be some actions to minimize the risks when Management of the company decides to accept the risks. Based on individual risk analysis, the most influential risks are coffee price and exchange rate. <br /> <br /> <br /> The action taken by the Company should be focused on minimizing the negative impact of fluctuation of coffee price and exchange rate to the cash flows of the project such as focus on improving efficiency in cost to support the fluctuations in revenue as impacted by the coffee price and the coffee production, or hedge the coffee price or exchange rate.<p align="justify"> <br /> <br />