Profitability Evaluation Of Capital Investment With Net Present Value (Npv) And Internal Rate Of Return (Irr) Method In Pt GGG Karawang, West Java
Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 7
Abstract
In 2018, PT GGG plans to develop a new factory in Karawang area, West Java. Management will require the new plant will also be supported with a factory of packaging. Currently PT GGG is faced with three options in fulfilling the development plan of the packaging factory is whether to move an existing machine from the factory in Surabaya or still buy new machines from Switzerland or France in accordance with the needs of the company. The most feasible investment option chosen by PT GGG to increase its packaging production capacity by 30% at a new plant in Karawang West Java is the second alternative of purchasing a new machine from Switzerland. The alternative is chosen because it can produce the greatest NPV value when compared with other alternative that is Rp 1.341.290.049.333. Profitability of this investment proposal is also very high that is equal to 245.25% so that allows the company although it should come out big investment in front but will have the return of capital in the first year. After the sensitivity analysis is done for pessimistic and optimistic condition, alternative proposal 2 can also be said still feasible to be implemented because it has positive NPV. This means that this investment proposal has a very small risk of loss if it will be run because of high profitability and not easily affected by changes in economic conditions.
Authors and Affiliations
Arief Priyono, Budi Santosa
Keywords
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- EP ID EP412222
- DOI 10.9790/487X-2007066475.
- Views 57
- Downloads 0
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