CAPITAL BUDGETING ANALYSIS OF SAPARASA COFFEE
Coffee is a valuable export commodity in Indonesia. In addition to demand for coffee from abroad, local coffee production is also aimed at domestic demand. It is known that domestic coffee is growing every year and will reach 5 million 60kilogram bags of coffee by 2020. In the last five years, consu...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/71262 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Coffee is a valuable export commodity in Indonesia. In addition to demand for coffee from abroad, local coffee production is also aimed at domestic demand. It is known that domestic coffee is growing every year and will reach 5 million 60kilogram bags of coffee by 2020. In the last five years, consuming coffee is part of the lifestyle, especially for young people.
Based on this phenomenon, one coffee shop, namely Saparasa Coffee, saw this as an opportunity. To take advantage of this opportunity, the owner plans to open a new or second outlet in Subang in 2023-2027. Therefore, a financial feasibility analysis is needed to see whether the expansion project is feasible to run in the investment period. The method used is to analyze capital budgeting by meeting several 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 sensitivity analysis. The franchisee must also understand the big picture of the business situation which is analyzed using PESTEL, Porter Forces, VRIO, and SWOT analysis.
Based on the analysis conducted, to carry out this project, the required investment is IDR 437,561,246. The NPV from the projected results for five years since the outlet was operated is estimated at IDR 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 results of the sensitivity test show that changes in raw material costs greatly affect the NPV but the NPV remains positive. Analysis of the business situation will determine recommendations for franchisees to open new outlets. The analysis shows that this project is feasible to run.
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