CAPITAL BUDGETING ANALYSIS OF NEW OUTLET KOPI LAIN HATI
Coffee is one of the valuable export commodities in Indonesia. Aside from global demand, the production of local coffee beans is also intended for local demand. It has been known that the growth of local demand for coffee is rising each year, and it reached 4.8 million 60-kilogram bags of coffee in...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/53319 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Coffee is one of the valuable export commodities in Indonesia. Aside from global demand, the production of local coffee beans is also intended for local demand. It has been known that the growth of local demand for coffee is rising each year, and it reached 4.8 million 60-kilogram bags of coffee in 2018/2019. In the last five years, consuming coffee is part of a lifestyle, particularly for younger generations.
Based on the phenomenon, one of Kopi Lain Hati’s franchisee sees this as an opportunity. To capture the opportunity, the franchisee plans to open the second outlet in Bekasi from 2022-2026. Hence, the capital budgeting analysis is needed to see whether this expansion project can be feasible or not within the investment period. The method used is to analyze capital budgeting by meeting criteria such as net present value (NPV), internal rate of return (IRR), payback period, discounted payback period, profitability index (PI), average accounting rate of return (AAR), and the sensitivity analysis. The franchisee also needs to understand the bigger picture of this business situation that has been analyzed with PESTEL, Porter’s five forces, VRIO, and SWOT analysis.
According to the analysis, the initial investment for executing the project is Rp 437,561,246. The NPV from the projection is estimated at Rp 676,945,947. The IRR of this project is 41%. The payback period and discounted payback period for this project are 3.63 and 3.91 years, respectively. The PI and AAR of this project are 2.52 and 1.2. The sensitivity analysis result shows that raw material cost changes significantly affect the NPV, but the NPV remains positive. The business situation analysis will also determine the recommendations for the franchisee to open the new outlet. The analyses show that this project is feasible. |
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