ASSESSING PROJECT FEASIBILITY FOR PT XYZ’S NEW MACHINE PURCHASE PLAN

• Main Author: Syuterhan J T P, Marcello
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/41088
• Institution: Institut Teknologi Bandung

In order to make an investment in a new project, every company needs to consider many things related with both internal and external condition. Therefore, before developing a project, it is needed to conduct a financial feasibility study first. The feasibility study help the firm to identify the potential return or loss of investment as part of the decision making consideration, can evaluate business alternatives, identify new opportunities after doing analysis, and help to identify and mitigating factors that could affecting the project earlier. This research will assessing PT XYZ project feasibility for PT XYZ’s new machine purchase plan to expand production for export to new India market. The research aimed to assess the feasibility of the project and also determine the risk from the investment. The financial feasibility study conducted in this research will used capital budgeting techniques and risk analysis. The capital budgeting techniques used to assess the feasibility projects are Net Present Value, Internal Rate of Return, Payback Period, and Discounted Payback Period. However, for the risk analysis, this research used sensitivity analysis and Monte Carlo simulation for simulation analysis to help determine the risk of the new investment project. The result of this research is the project new investment is feasible to conduct based on capital budgeting techniques since the Net Present Value is considered to be positive, the Internal Rate Return is higher than the cost of capital, the payback period and discounted payback period is occurred before the asset lifetime ends. However, based on the sensitivity analysis and simulation analysis, there are still risks that could happen regarding with the investment in the future if some aspects is fail to be maintained. The aspects such as price, cost of goods sold, and product quantity to be sold is the main aspects which need to be maintained by PT XYZ