ASSESSING THE INVESTMENT PLAN AND FINANCING STRATEGY FOR PT. XYZ

• Main Author: A. K. (19015234), Nastassja
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/29548
• Institution: Institut Teknologi Bandung

In the new era of President Widodo regime, the government arranged One Million Houses program <br /> <br /> to boost the development of affordable housing. PT. XYZ has the opportunity to help the <br /> <br /> government in the process to achieve the target from the program. Under the auspices of LPIK-ITB, <br /> <br /> PT. XYZ has recently got its patent of the design of modular wood to build prefabricated housing <br /> <br /> as its product. The modular wood is considered sustainable as the material to build houses on remote <br /> <br /> areas. The construction of the house using this material will be faster and lowering the cost of <br /> <br /> production. <br /> <br /> PT. XYZ has to be prepared to produce their own product massively. Therefore, it is really urgent <br /> <br /> for the company to have their own plant. In order to build the plant, the company needs IDR <br /> <br /> 8,314,000, which will be funded using 100% of equity. The research aims to help PT. XYZ to <br /> <br /> determine whether the investment plan is worth to be executed or not, and define the financing <br /> <br /> strategy using equity, with the constraints of 51% of ownership and IDR 1,000,000,000 as the <br /> <br /> current shareholders investment. <br /> <br /> The beginning of the research starts from the development of pro forma financial statement to <br /> <br /> forecast company’s future financial condition. This research used NPV, IRR, and payback period <br /> <br /> method to do the feasibility analysis and also discounted cash flow model to do the valuation of PT. <br /> <br /> XYZ. The value of the company will be used to calculate the suitable price per share for external <br /> <br /> investors. <br /> <br /> According to the result, the investment plan of PT. XYZ is considered feasible since the feasibility <br /> <br /> study shows positive result for NPV, IRR, and payback period. The NPV is IDR 3,917,044,297.37 <br /> <br /> showing a positive results mean the project is feasible. Initial rate of return is on 18.34% which is <br /> <br /> higher than the cost of capital of 11.54%. Payback period also shows that this project is feasible to <br /> <br /> execute with the result of 4 years 4 months and 28 days, respectively which is lower than the <br /> <br /> maximum acceptable period, 5 years. Regarding to financing strategy, the company failed to fulfill <br /> <br /> both of the constraints altogether. The research suggests that the company has 2 options. The first <br /> <br /> option is to maintain the current shareholders investment at IDR 1,000,000,000 which will cost <br /> <br /> reducing the ownership to 40.10% with price per share at IDR 49,156.10. The second option is to <br /> <br /> maintain the ownership at 51% level, which will cause the company to increase the current <br /> <br /> shareholders investment from IDR 1,000,000,000 to be IDR 2,334,761,615.02 with price per share <br /> <br /> for IDR 26,777.07.