PT.

LAYAK ALIH SEGERA

FINANCIAL FEASIBILITY STUDY

(CASE STUDY FM-02)-MM 5006

ENMARK 01

17 JANUARY 2023
PT. LAYAK ALIH SEGERA (LAYARA) is a Manufacturer Company engaged in
producing various building materials, with the Steel as it’s leading and main Raw
Materials.
A giant Business group of companies based in Australia, called DE FEU METAL,
which producing steel door frame, has the intention to make a joint venture with
LAYARA for their business expansion and market diversifications, as a Foreign
Direct Investment in Indonesia to explore the huge opportunity in Real Estate
Business in that country.
For that purpose, De Feu plan to make a Joint Venture Corporation with
LAYARA, but keep the name of the company as the business vechile.
Based on DE FEU METAL long and established business experience, this New
Factory for producing the steel door frame, would need the Total Investment IDR
5.000.000.000,- (Indonesian Rupiah Five Billions).

They have already prepare the Profit & Loss Financial Projection, as follows :
(in IDR MIllion)
2021 2022 2023 2024 2025

Sales 4.000 5.000 6.000 7.200 8.000

COGS 1.000 1.200 1.300 1.450 1.700

Gross Profit 3.000 3.800 4.700 5.750 6.300

Over Head 500 800 900 1.000 1.100

Depreciation 500 500 500 500 500

EBIT 2.000 2.500 3.300 4.250 4.700

Interest Exp, 20% 800 800 800 800 800

EBT 1.200 1.700 2.500 3.450 3.900

Tax, 30% 360 510 750 1.035 1.170

NAT 840 1.190 1.750 2.415 2.730

Retention for growth 40 90 150 315 430

The assumption used for the Financial Projection, are as follows :

 Financing Strategy :
o Loan : Rp. 3.000.000.000,- (= 60%)
o Equity : Rp. 2.000.000.000,- (= 40%)

 Bank Informations :
o Loan Interest Rate : 15,0% per Year
o Time Deposit Rate : 7,5% per Year

CASE STUDY PROBLEMS :

1. Kindly do the review this Project’s Financial Feasibility, using the Capital
Budgeting Analysis Concepts, and present your conclusions which at least
covered the Financial Parameters, such as :

a. Pay Back Period (PBP)

b. Net Present Value (NPV)
c. Return on Investment (ROI)
d. Return on Equity (ROE)
e. Internal Rate of Return (IRR)

2. What kind of Funding Strategy should this Company apply, in

relation to the composition of Debt versus Equity Source of Funds ?