�PENGANGGARAN MODAL �(CAPITAL BUDGETING)�

• Penganggaran modal (capital budgeting):

Merencanakan

Menilai (evaluasi)

Menyeleksi aset proyek

Menentukan alternatif untuk tujuan maksimalisasi nilai.

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• Penganggaran modal penting karena:

1. Efek jangka panjang

2. Dana cukup besar

3. Investasi berkaitan dengan risiko.

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Capital Budgeting: Planning process for investment in long-term assets

Examples:

Investing in a new building @ Rp 30 billion.

• Will that investment give added value ?
• How much is the return and the risk ?

Capital Budgeting Concept

Deciding which project is good or bad

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Estimate expected future cashflows

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Evaluate the project based on capital budgeting evaluation criteria

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Two or more projects can be

• Mutually Exclusive – may choose only one
• Independent – may choose all good projects

� PENGANGGARAN MODAL � (CAPITAL BUDGETING)�

Usulan proyek investasi:

• Independent project, dua atau lebih usulan proyek, tidak saling berhubungan. Proyek layak (NPV +) keduanya diterima

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• Mutually exclusive project, dua atau lebih usulan proyek yang mempunyai manfaat sama dan saling meniadakan. Proyek layak (NPV + terbesar) manfaat sama

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� PENGANGGARAN MODAL � (CAPITAL BUDGETING)�

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• Menggunakan arus kas (cash flow) bukan laba.

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• Arus kas (cash flow) arus kas yang relevan dengan investasi, diferensial (incremental) arus kas, dan sesudah pajak.

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Capital Budgeting Concept

Initial Cash Outlay

• Invest $10 million to buy a new machine

🡺 (IO) = $10 million

Cash Flow

CF_n = Revenues - Costs

• Periodic cash flow

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• Terimal cash flow : Cash flow at the end of the project, can be positive or negative

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CF₀ = -10 million

ESTIMASI ARUS KAS

• Io------------------1--------------------2-------------------3-----------------N

Initial Outlay Operating Cash Flow Terminal Cash Flow

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• Initial outlay: Arus kas keluar awal investasi.
• Operating (differential) cash flows: akumulasi arus kas masuk dan keluar yang relevan dengan proyek dievaluasi selama usia investasi.
• Terminal cash flow: cash flow akhir ditambah dengan nilai sisa /harga jualnya (sesudah pajak), dan pengembalian modal kerja

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�CAPITAL BUDGETING METHOD�

Menilai investasi dalam penganggaran modal:

a. Metode penilaian tanpa diskonto

b. Metode penilaian dengan diskonto

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CAPITAL BUDGETING METHOD #1

How many years does it take to cover the initial investment ?

Payback Period

CAPITAL BUDGETING METHOD #1

Payback Period

P R O J E C T

Time A B

0 (10,000.) (10,000.)

1 3,500 500

2 3,500 500

3 3,500 4,600

4 3,500 10,000

CAPITAL BUDGETING METHOD #1

0 1 2 3 4

3,500

3,500

3,500

3,500

(10,000)

Time A B

0 (10,000.) (10,000.)

1 3,500 500

2 3,500 500

3 3,500 4,600

4 3,500 10,000

P R O J E C T

Payback Period

CAPITAL BUDGETING METHOD #1

Payback Period

0 1 2 3 4

3,500

-6,500

3,500

-3,000

3,500

+500

3,500

(10,000)

Payback within 3 years

Cumulative CF

Time A B

0 (10,000.) (10,000.)

1 3,500 500

2 3,500 500

3 3,500 4,600

4 3,500 10,000

P R O J E C T

CAPITAL BUDGETING METHOD #1

Payback Period

CAPITAL BUDGETING METHOD #1

Payback Period

0 1 2 3 4

500

500

4,600

10,000

(10,000)

CAPITAL BUDGETING METHOD #1

Payback Period

0 1 2 3 4

500

-9,500

500

-9,000

4,600

-4,400

10,000

+5,600

(10,000)

Payback within 4 years

Cumulative CF

CAPITAL BUDGETING METHOD #1

Payback Period

0 1 2 3 4

500

-9,500

500

-9,000

4,600

-4,400

10,000

+5,600

(10,000)

Payback within 4 years

Cumulative CF

Evaluation:

Company sets maximum acceptable payback. If Max PB = 3 years, accept project A and reject project B

Weaknesses of Payback Period

• subjective.
• Not consider time value of money.
• Not consider required rate of return.
• Not consider all cashflows from the project

Weaknesses of Payback Period

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Example of a project cashflows

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Other methods

1) Net Present Value (NPV)

2) Profitability Index (PI)

3) Internal Rate of Return (IRR)

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All three methods above

Consider all cashflows, time value of money and required rate of return.

In line with the concept of goal of firm, value, and value creation:

🡺 Create value if: value of benefits > costs

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CAPITAL BUDGETING METHOD #2

Present Value of all cash flows (positive and negative).

Net Present Value

NPV = PV Cash inflow – IO

NPV = + + +···+ – IO

CF₁

(1+ k )

CF₂

(1+ k )²

CF₃

(1+ k )³

CF_n

(1+ k )ⁿ

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

500

500

4,600

10,000

(10,000)

k=10%

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

500

500

4,600

10,000

(10,000)

455

k=10%

$500

(1.10)

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

500

500

4,600

10,000

(10,000)

455

413

k=10%

$500

(1.10) ²

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

500

500

4,600

10,000

(10,000)

455

413

3,456

k=10%

$4,600

(1.10) ³

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

500

500

4,600

10,000

(10,000)

455

6,830

413

3,456

k=10%

$10,000

(1.10) ⁴

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

500

500

4,600

10,000

(10,000)

455

$11,154

6,830

413

3,456

k=10%

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

500

500

4,600

10,000

(10,000)

455

6,830

413

3,456

k=10%

PV Benefits > PV Costs

$11,154 > $ 10,000

$11,154

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

500

500

4,600

10,000

(10,000)

455

6,830

413

3,456

k=10%

PV Benefits > PV Costs

$11,154 > $ 10,000

NPV > $0

$1,154 > $0

$11,154

$1,154 = NPV

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

3,500

(10,000)

k=10%

3,500

3,500

3,500

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

3,500

(10,000)

k=10%

3,500

3,500

3,500

NPV = + + + – 10,000

3,500

(1+ .1 )

3,500

(1+ .1)²

3,500

(1+ .1 )³

3,500

(1+ .1 )⁴

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

3,500

(10,000)

k=10%

3,500

3,500

3,500

NPV = + + + – 10,000

3,500

(1+ .1 )

3,500

(1+ .1)²

3,500

(1+ .1 )³

3,500

(1+ .1 )⁴

PV of 3,500 Annuity for 4 years at 10%

CAPITAL BUDGETING METHOD #2

Net Present Value

0 1 2 3 4

3,500

(10,000)

k=10%

3,500

3,500

3,500

NPV = + + + – 10,000

3,500

(1+ .1 )

3,500

(1+ .1)²

3,500

(1+ .1 )³

3,500

(1+ .1 )⁴

= 11,095 – 10,000 = $1,095

CAPITAL BUDGETING METHOD #2

Accept if NPV ≥ 0.

NPV- Decision Rule

Accept A & B

� CAPITAL BUDGETING METHOD�

Keputusan untuk NPV:

• Jika NPV bernilai positif (NPV ≥ 0) usulan proyek layak diterima.
• Jika NPV bernilai nol (NPV= 0) usulan proyek layak diterima, karena memberikan pengembalian yang sama dengan required rate of return.
• Jika NPV bernilai negatif (NPV < 0) usulan proyek tidak layak/ditolak

CAPITAL BUDGETING METHOD #3

PI =

Present Value of cash inflows

IO

PROFITABILITY INDEX

CAPITAL BUDGETING METHOD #3

+ + +···+

CF₁

(1+ k )

CF₂

(1+ k )²

CF₃

(1+ k )³

CF_n

(1+ k )ⁿ

PI =

IO

PROFITABILITY INDEX

PI =

Present Value of cash inflows

IO

CAPITAL BUDGETING METHOD #3

10,000

PI =

CAPITAL BUDGETING METHOD #3

10,000

PI =

PI =

11,154

10,000

= 1.1154

CAPITAL BUDGETING METHOD #3

10,000

PI =

PI =

11,154

10,000

= 1.1154

Indeks Profitabilitas untuk proyek A

10,000

PI =

3,500( )

1

.10(1+.10)⁴

1

.10

CAPITAL BUDGETING METHOD #3

10,000

PI =

PI =

11,154

10,000

= 1.1154

Indeks Profitabilitas untuk proyek A

10,000

PI =

3,500( )

1

.10(1+.10)⁴

1

.10

PI =

= 1.1095

11,095

10,000

Indeks Profitabilitas untuk proyek B

• Decision rule:

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• Accept if PI > 1.
• Reject if PI < 1

Profitability Index

Internal Rate of Return (IRR)

IRR: return of the invested capital

IRR : Return on investment for a capital project

CAPITAL BUDGETING METHOD #4

CAPITAL BUDGETING METHOD #4

CAPITAL BUDGETING METHOD #4

IRR = k that makes PV of cash inflows equal to cash outflow or IO

Caculation of IRR

The IRR is the discount rate that makes NPV = zero.

CAPITAL BUDGETING METHOD #4

Lihat IRR Excel File

The Internal Rate of Return: Example

Consider the following project:

The internal rate of return for this project is 19.44%

The NPV Payoff Profile for This Example

If we graph NPV versus discount rate, we can see the IRR as the x-axis intercept.

CAPITAL BUDGETING METHOD #4

Decision rule : IRR

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If IRR > required rate of return, accept.

If IRR < required rate of return, reject.

Comparison of methods

Project A Project B Choose

Payback < 3 years < 4 years A

NPV $1,095 $1,154 B

IRR 14.96% 13.50% A

PI 1.1095 1.1154 B

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Comparison of methods

Time Value of Money

• Payback - Does not adjust for timing differences
• NPV, IRR and PI take into account the time value of money

Relevant Cash Flows?

• NPV, IRR and PI use all Cash Flows
• Payback method ignores Cash Flows that occur after the Payback Period.

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0 1 2

5,000

5,000

(10,000)

Project 1

0 1 2 3

5,000

5,000

(10,000)

Project 2

10,000

Both Projects have

Identical Payback

KEUNGGULAN METODE � NPV, PI DAN IRR

• Keunggulan menggunakan metode NPV, PI, dan IRR
• Metode ini menggunakan arus kas dan required rate of return
• Metode ini menggunakan nilai waktu uang
• Metode ini konsisten dengan tujuan dari perusahaan untuk memaksimalkan kekayaan pemegang saham (the firm’s goal of shareholder wealth maximization).
• Menciptakan nilai jika value of benefits > cost

Comparison of methods

Reinvestment Rate

• NPV assumes cashflows are reinvested at required rate of return, k.
• IRR assumes that cashflows are reinvested @ IRR

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Conclusion: NPV is the Better Method for project evaluation

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Some considerations

• Incremental Cash Flows: Measure cash flows that change if a project is undertaken
• Do not include sunk costs
• Do not include allocation of existing overhead
• Do subtract lost sales of other products
• Include cost savings as a positive cash flow.

Some considerations

New Project vs. Replacement Project

• New project – simply addition to company
• Replacement – replace and existing old machine or plant.

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Do not subtract financing costs - Interest and Dividend payments.

Capital Rationing

Example

Project IO NPV PI

1 50,000 1,500 1.03

2 40,000 3,000 1.075

3 30,000 2,500 1.083

4 20,000 1,000 1.05

5 90,000 6,000 1.067

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The following projects are independent and constrained with total budget of $100,000.

All projects have NPV > 0, PI >1,

Capital Rationing

Example

2, 3 & 4 40,000 3,000

+30,000 +2,500

+20,000 +1,000

90,000 6,500

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Project

Combinations IO NPV

Capital Rationing

Example

2, 3 & 4 40,000 3,000

+30,000 +2,500

+20,000 +1,000

90,000 6,500

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5 90,000 6,000

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Project

Combinations IO NPV

Capital Rationing

Example

2, 3 & 4 40,000 3,000

+30,000 +2,500

+20,000 +1,000

90,000 6,500

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5 90,000 6,000

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1 & 2 50,000 1,500

40,000 3,000

90,000 4,500

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Project

Combinations IO NPV

Capital Rationing

Example

2, 3 & 4 40,000 3,000

+30,000 +2,500

+20,000 +1,000

90,000 6,500

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5 90,000 6,000

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1 & 2 50,000 1,500

40,000 3,000

90,000 4,500

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1,3 & 4 50,000 1,500

30,000 2,500

20,000 1,000

100,000 5,000

Project

Combinations IO NPV

Capital Rationing

Example

2, 3 & 4 40,000 3,000

+30,000 +2,500

+20,000 +1,000

90,000 6,500

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5 90,000 6,000

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1 & 2 50,000 1,500

40,000 3,000

90,000 4,500

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1,3 & 4 50,000 1,500

30,000 2,500

20,000 1,000

100,000 5,000

Project

Combinations IO NPV

MINI CASE: INVESTASI GUDANG

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Elmo, manager cabang UT, mempertimbangkan berinvestasi membangun gudang di lahan strategis milik UT yang diperkirakan akan meningkatkan revenue cabang tersebut tiap tahunnya. Berdasarkan informasi yang dikumpulkannya:

• Initial investment Rp 2 milyar
• Initial net working capital Rp 100 juta
• Tambahan revenue per tahun Rp 700 juta
• Maintenance costs per tahun Rp 150 juta
• Economic age dari Gudang 5 tahun
• Terminal Value setelah 5 tahun Rp 1250 juta
• Pajak 25%; k=10%

LEARNING LOG

TERIMAKASIH