CAPITAL STRUCTURE ANALYSIS FOR 35.000 MW ELECTRICITY PROJECT (CASE STUDY: PT PLN PERSERO)
Electricity is the one of our basic needs these days and the demands of electricity are increasing along with the increasing population in Indonesia. To fulfill the increasing demands of the electricity, government created a program called 35.000 MW. The program later designated to PT PLN Persero to...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/35929 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Electricity is the one of our basic needs these days and the demands of electricity are increasing along with the increasing population in Indonesia. To fulfill the increasing demands of the electricity, government created a program called 35.000 MW. The program later designated to PT PLN Persero to be done. The program will be needed huge investments. The source of the funding may vary, it could be from outside or inside Indonesia. PT PLN Persero as the sole company appointed by the government to generate, transmit and distribute electricity in Indonesia needs to know their combination of the debt and equity for the program whether it is from inside or outside the company in order to produce their maximum firm value. A theory from Gitman and Zutter (2015) stated that to maximize firm value we need to minimize the firm’s weighted average cost of capital (WACC). The theory is used in this final project along with the Markowitz Portfolio Theory that quantifying each of the cost of capital’s risks available.
From the methods, it is obtained weight combination of 20% domestic cost of equity, 39.66% domestic cost of debt, and 40.34% global cost of debt. Those combination determined as the 35.000 MW program’s optimal capital structure and the calculation of the program’s optimal capital structure will be affected the company’s current capital structure become 42.86% of liability and 57.14% of equity.
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