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Oleh : Arwan Apriyono. If B/C Formula Assess 1 Project The project is profitable, if this ratio is greater than one, Assess >2 Project Use incrementa.

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Presentation on theme: "Oleh : Arwan Apriyono. If B/C Formula Assess 1 Project The project is profitable, if this ratio is greater than one, Assess >2 Project Use incrementa."— Presentation transcript:

1 Oleh : Arwan Apriyono

2 If B/C Formula Assess 1 Project The project is profitable, if this ratio is greater than one, Assess >2 Project Use incrementa Analysis If B/C ≥ 1  choose the higher investation If B/C < 1,  choose the lower investation

3 Assess 1 Project A car leasing company buys a car from a wholesaler for $24,000 and leases it to a customer for four years at $5,000 per year. Since the maintenance is not included in the lease, the leasing company has to spend $400 per year in servicing the car. At the end of the four years, the leasing company takes back the car and sells it to a secondhand car dealer for $ 15,000. For the moment, in constructing the cash flow diagram, we will not consider tax, inflation, and depreciation. Assess 1 Project A car leasing company buys a car from a wholesaler for $24,000 and leases it to a customer for four years at $5,000 per year. Since the maintenance is not included in the lease, the leasing company has to spend $400 per year in servicing the car. At the end of the four years, the leasing company takes back the car and sells it to a secondhand car dealer for $ 15,000. For the moment, in constructing the cash flow diagram, we will not consider tax, inflation, and depreciation. Example

4 Step 1 Make cast flow diagram Example

5 Step 1 Calculate the net present value of the benefits and the costs.

6 Compare 2 Project Project A : Example 1 Project B : Buy a car at $25,000, lease it for two years at $10,000 per year with no maintenance cost and sell it for $18,000 at the end of two years. Assuming an interest rate of 10%, which project should we choose? Compare 2 Project Project A : Example 1 Project B : Buy a car at $25,000, lease it for two years at $10,000 per year with no maintenance cost and sell it for $18,000 at the end of two years. Assuming an interest rate of 10%, which project should we choose? Example

7 Solution Castflow Project ACastflow Project B Increment Castflow Solution Castflow Project ACastflow Project B Increment Castflow Example

8 Solution B/C lebih dari 1, maka ambil project yang investasi lebih besar Jika B/C lebih kecil dari 1, ambil project yang investasi/cost lebih kecil

9 If  is the period of time required for the benefits of an investment to equal the cost of the investment  We first construct the net cash flow diagram and then by simple arithmetic calculation add the benefits and the cost year by year until the total equals the initial investment.  The payback period neglects the time value of money and is only accurate when the interest rate is zero  Many analysts consider this method to be a useful quick and dirty way of comparison. If  is the period of time required for the benefits of an investment to equal the cost of the investment  We first construct the net cash flow diagram and then by simple arithmetic calculation add the benefits and the cost year by year until the total equals the initial investment.  The payback period neglects the time value of money and is only accurate when the interest rate is zero  Many analysts consider this method to be a useful quick and dirty way of comparison. Payback Method Benefit tidak sama dengan profit Profit = benefit - cost

10 If Example

11 Alternative A : Payback period is the period of time required for the profit or other benefits of an investment to equal the cost of the investment. Thus the payback period for Alt. A is 2.5 years. Alternative B : Since the annual benefits are uniform, the payback period is simply : $2783/$1200 per year years Tominimize the payback period, choose Alt. B Alternative A : Payback period is the period of time required for the profit or other benefits of an investment to equal the cost of the investment. Thus the payback period for Alt. A is 2.5 years. Alternative B : Since the annual benefits are uniform, the payback period is simply : $2783/$1200 per year years Tominimize the payback period, choose Alt. B Example

12 Two machines are being considered for purchase. If the MARR is 10%,which machine should be bought? 1. Use an IRR analysis comparison. 2. Use a payback periode analysis 3. If, interest is 15%, which machine should be chosen Two machines are being considered for purchase. If the MARR is 10%,which machine should be bought? 1. Use an IRR analysis comparison. 2. Use a payback periode analysis 3. If, interest is 15%, which machine should be chosen Task 3 Dikumpulkan Kamis 8 Desember 2011


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