FEASIBILITY STUDY OF HOUSING PROJECT OF PT. XYZ

• Main Author: Indahsari Siagian, Dimitria
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/47673
• Institution: Institut Teknologi Bandung

The population of people in Indonesia is growing rapidly. Housing and settlements are the problems that will arise in line with population growth. In order to meet the needs of housing, the government provides subsidies for low income communities (Masyarakat Berpenghasilan Rendah). North Sumatra is the fourth biggest distribution of population by province in Indonesia with the needs of subsidized house for low income communities. Deli Serdang is the regency of North Sumatra that provides accessible, safety and comfortable environment as a place to live. PT. XYZ is a property business that has plan to make an investment by building subsidized housing for low income communities in Indonesia. The company will use the equity of the company which amounts to IDR 13,054,005,556 and the remaining will be financed by using debt of IDR 4,000,000,000. PT. XYZ has not made a financial feasibility study for this investment project in order to provide information that will help the Board of Director to decide the implementation of the project and assess the risk in implementing the project. The output of the research is analyzing the feasibility study of the investment project by applying several financial techniques in capital budgeting in order to know about is the project worth doing or not, that consist of Net Present Value, Internal Rate of Return, Payback Period, and Profitability Index and assessing the risk that will be faced by PT. XYZ when the investment project is being implemented by using sensitivity analysis and Monte Carlo simulation. The results show that the Net Present Value of the project is IDR 7,633,426,960.54 which shows positive values, the profitability index is 1.78 that is greater than 1, the IRR is 38.75% that is higher than the cost of capital, and the payback period of the project is 2 years 1 months 10 days. Based on the all the techniques, the result shows the investment project is feasible to be implemented by PT. XYZ. In the risk analysis, there are 3 variables that can be considered as sensitive variable to the project’s NPV which consist of the price per house, quantity sold per month, and house building cost per house. Based on the Monte Carlo simulation, there is probability that the investment project will generate negative values, and this project can be considered have risk. The recommendation to the company will be given regarding the price per house, quantity sold per month, and house building cost per house in order to achieve the company’s goal in this project. Keywords: Feasibility study, Capital Budgeting, Subsidized House