THE ROLE OF FINANCIAL MANAGEMENT Dr. H. Mustika Lukman Arief , SE., MBA., MM.

THE ROLE OF FINANCIALMANAGEMENT

Dr. H. Mustika Lukman Arief, SE., MBA., MM.

• Apa itu manajemen keuangan….?

Manajemen Keuangan meliputi semua aktivitas yang berhubungan dengan usaha mendapatkan dana yang dibutuhkan perusahaan serta mengggunakan dan/mengalokasikan dana tersebut secara efesien dan efektif guna mencapai tujuan perusahaan.

Manajemen keuangan digunakan untuk menjawab pertanyaan:

1. What long-term investments should the firma engage in?

2. How can the firm raise the money for the required investments?

3. How much short-term cash flow does a company need to pay its bills?

Proses manajemen keuanganfor-profit organization

Laba bersih Dividen

Laba ditahan

Inv. Jangka panjang

Inv. Jangka pendek

Jangka pendek(Hutang Lanca)

Jangka panjangModal sendiri: Laba ditahan Saham Hutang jk. pjg

Keputusan

Investasi

Keputusan

Investasi

Keputusan

Pendanaan

Kebijakan Dividen

Alternatif investasi?Penilaian investasi?pemilihan investasi?

Jumlah kebutuhan dana?Sumber dana?Struktur modal?Biaya modal?

The Role of The Financial Manager Capital Budgeting decision

decision to in tangible or intangible assets also called the investment decision

Financing decision raising money that the firm needs for its

investments and operations Capital structure

the mix of long term debt and equity financing

Untuk kebijakan fungsi tersebut, ada 3 keputusan yang perlu diambil

1. Keputusan investasi2. Keputusan Pendanaan3. Kebijkan Dividen

Masing-masing keputusan harus berorientasi pada pencapaian tujuan perusahaan

Tujuan PerusahaanDalam pengertian mikroekonomi disebut bahwa tujuan perusahaan adalah memaksimalkan keuntungan. Namun ditinjau dari sudut keuangan tujuan ini mengabaikan berbagai kerumitan yang ada dalam praktek pengambilan keputusan sehari-hari

Kelemahan Maksimalisasi Keuntungan:1. Tidak mengaitkan besarnya keuntungan yang dihasilkan denga

waktu perolehannya2. Tidak memperhatikan masalah waktu dan ketidakpastian3. Mengabikan lamanya waktu pengembalian4. Mengabaikan beban modal yang harus dipikul pemegang saham

Tujuan Perusahaan

Tujuan perusahaan adalah memaksimalkan kekayaan pemegang saham dengan cara memaksimalkan nilai perusahaan‘Basic goal: Maximize stockholder value’ indikatornya

- Firm’s value yang maksimal- Stock price yang maksimal

Nilai perusahaan dicerminkan oleh harga pasar saham Mengapa harga pasar saham mencerminkan nilai perusahaan atau kekayaan pemegang saham?

Tujuan manajemen Keuangan mempelajari dan memahami bagaimana upaya

perusahaan dalam memaksimalkan nilai perusahaannya (Value of the firm) memalui 3 macam keputusan yaitu: keputusan investasi, keputusan pendaaan, kebijakan dividen.

Vf = f (I, F, D)

Vf = value of the firm (nilai perusahaan)I = Investment DecisionF = Financial DecisionD = Dividen Policy Decision

The Objektive FunctionMaximime the Value of the firm

Basic corporation financial decision

1. How do you allocate resources across competing uses?2. How do you raise founds to finance the projects?3. How much do you reinvest back into the business and how much do you return to you stockholders?

The corporate financial toolbox

Accounting stetement and ratioPresent valueRisk and return meodelsOption pricing models

Aksioma-aksioma yang diperlukan untuk memahami Manajemen Keuangan

Aksioma 1 Keseimbangan risiko dan pengembalian (the risk-return tradeoff)Jangan menambahkan risiko kecuali mendapatkan kompensasi tambahan pendapatan

Aksioma 2 Nilai waktu uang (time value of money)-uang yang diterima ssekarang lebih berharga dari uang yang diterima kemudian

Aksioma 3 Yang utama adalah uang kas-bukan besarnya laba

Lanjutan…Aksioma 4 Tambahan Arus Kas (Increment Cash Flow) satu-satunya

pertambahan nilai yang dihitung

Aksioma 5 Kondisi persaingan pasar-alasan kenapa sangat sulit mendapatkan laba yang luar biasa

Aksioma 6 Pasar modal yang efesien-pasar yang bergerak cepat dan harga yang tepat

Aksioma 7 Masalah keagenan-manajer tidak akan bekerja bagi pemilik perusahaan jika tidak selaras dengan kepentingan mereka

Aksioma 8 Perpajakan yang berdampak pada keputusan bisnis

Aksioma 9 Tidak semua risiko sama, ada sebagian risiko yangd dapat didiversifikasi

Aksioma 10 Melakukan sesuatu yang benar adalah perilaku yang etis, dan banyak dilema etika dalam manajemen keuangan

What is a Corporation?

Types of Corporations Public Companies Private Corporations Limited Liability Corporations (LLC)

Organizing a Business

Types of Business Organizations Sole Proprietorships Partnerships Corporations Limited Liability Partnerships

Organizing a Business Sole Partnership Corporation proprietorship

Who owns the business?

The manager Partners Shareholders

No No Usually

Unlimited Unlimited Limited

No No Yes

Are managers and owners separate?What is the owner’s liability?Are the owner & business taxed separately?

Question

1. Why should a company concetrate primarily on wealth maximization instead of profit maximization?

2. What are the three types of financial management decisions? For each type of decision, give an example of the business transaction that would be relevant.

3. Firms often involve themselves in projects that do not result directly in profits: for example, IBM and Mobil Oil frequently support public television broadcast. Do these projects contradict the goal of maximization of shareholder wealth? Why or why not.

Case In early 2001, Doc and Lyn McGee formed the McGee Company. The company produced a full line of cakes, and its specialties included chess cake, le,on pound cake, and double-iced, double-chocolate cake. The couple formed the company as an outside interest, and both continued to marketing and distribution. With good product qualty and sound marketing plan, the company grew rapidly. In early 2006, the company was featured in a widely distributed entrepreneurial magazine. Later that year, the company was featured in Gourmet Desserts, sales exploded, and the company began receiving orders from all over the world.Because of the increased sales. Doc left his order job, followed shortly by lyn. The company hired additional workers to meet demand. Unfortunately, the fast growth experienced by the company led to cash flow and capacity problems. The company is currently producing as many cakes a possible with the assets it owns, but demand for its cakes is still growing. Further, the company has been approached by national supermarket chain with an proposal to put four of its cakes in all of the chain’s stores, and a national restaurant chain has contracted the company obout selling McGee cakes in its restaurants. The restaurant would sell the cakes without a brand name.

Doc and Lyn have operated as a sole proprietorship. They have approached you to help manage direct the company’s growth. Specifically, they have asked you to answer the following questions:

1. What are the advantages and disadvantages of changing the company organization from a sole proprietorship to an Limited Liabilities Company (LLC)?

2. What are the advantages and disdvantages of changing the company organization from a sole proprietorship to a corporation?

3. Ulimately, what action would you recommend the company undertake? Why ?

Financial Statement Analysis

Financial Statement Analysis

Financial analysis can be defined as the process of assessing the financial condition of a firm

Basic Fianancial Statements Balanced Sheet The Income Statement

The Balance Sheet

Definitionfinancial statements that show the value of the firms’s assets and liabilities at a particular point in time (from an accounting perspective)

US Corporation Balance Sheet U.S. CORPORATION 2004 and 2005 Balance Sheets (S in Millions)

Assets Liabilities and Owners’ Equity 2004 2005 2004 2005 Current assets current liabilitiesCash $ 104 $ 160 ccounts payable $ 232 $ 266Accoumts receivable 455 988 notes payable 196 123Inventory 553 555 total $ 428 $ 389Total $1.112 $1.403Fixed assetsNet plant and Long-term debt $ 408 $ 454Equipment $1,644 $1,709 Owners’ equity Common stock and Paid-in surplus 600 640 Retained earnigs 1,320 1,629 Total $1,920 $2,269 Total liabilities andTotal assets $2,756 $3,112 owners’ equty $2,756 $3,112

The Income Statement

Definition Financial statement that shows the revenues, expenses, and net income of a firm over a period of time (from an accounting perspektive)

US Corporation Income Statement U.S. CORPORATION

2005 Income Statement (S in Millions)

Net sales $1,509Cost of goods sold 750Depreciation 65Earnings before interest and taxes $ 694Interest paid 70Taxable income $ 624Taxes 212Net income $ 412 Diviends $ 103 Addition to retained earnings 309

Why Evaluate Financial Statements?

• Internal uses- Performance evaluation-compensation and

comparison between divisions- Planning for the future-guide in estimating

future cash flows• External uses

- Creditors- Suppliers- Custolers

- Stockholders

Financial Ratio

• The principal analytical tool of the financial analyst is the financial ratio

• Financial ratios help us identify some of the financial strengths and weaknesses of a company

• The ratios give us a way of making meaningful comparisons of a firm’s financial data at different points in time and with other firms

Categori of Financial Ratios

• Short-term solvency or liquidity ratios• Long-term solvency or financial leverage ratios• Asset management or turnever ratios• Profitability ratios• Market value ratios

Liquidity Ratios

Quick ratio = current assets - inventorie s Current liabilitie s

Current ratio = current assets current liabilities

Cash ratio = cash + marketable securities Current liabilities

Long-term solvency or financial leverage ratios

Total debt ratio = total liabilities total assets

Debt/equity ratio = Total debt equity

Times interest earned = EBIT Interest payments

Long term debt ratio = long term debt long term debt+equty

Equity multiplier = Total Assets equity

Asset management or turnover ratios

Receivable turnover ratio = Sales Receivable

Day’s sales in receivable = 365 Receivables turnover

Inventory turnover ratio = cost of goods sold Inventory

Day’s sales in inventory = inventory Cost of goods sold/365

Asset management or turnover ratios

Fixed asset turnover ratio = Sales Net fixed assets

Total asset turn over= Sales Total assets

NWC Turnover = Sales/NCWNet working capital (NCW) = CA - CL

Profitability ratiosNet profit margin = net income Sales

Return on asset (ROA) = net Income Total

Return on equity = net income Total equity

Market value ratios

• PE Ratio = Price per share/Earnings per share

• Market-to-book ratio = market value per sgare/book value per share

Sample Balance SheetNumbers in millions

2008 2007 2008 2007

Cash 696 58 A/P 307 303

A/R 956 992 N/P 26 119

Inventori 604 625 Other CL 1,662 1,352Total CL 1,995 1,775

Total CA 2,256 1,675 LT Debt 843 1,091

Net FA 3,138 3,358 Total 2,556 2,167Equty

Total 5,394Asset

5,033 Total Liab. 5,394 5,033& Equity

Sample Income Statement

Numbers in millions, except EPS & DPS

Revenues 5,000Ost of Goods Sold 2,006Expenses 1,740Depreciation 116EBIT 1,138Interest Expense 7Taxable income 1,131Taxes 442Net Income 689EPS 3.61Dividends per share 1.08

Liquidity Ratios

1. Current Ratio = CA/CL- 2256/1995= 1.13 times

2. Quick Ratio = (CA-Inventory)/CL- (2256-604)/1995 = 83 times

3. Cash Ratio = Cash/CL-696/1995 = 35 times

Long-term Solvency ratios

• Total Debt Ratio = (TA – TE)/ TA- (5394 – 2556)/5394=52.61%

• Debt/Equity = TD/TE- (5394-2556)/2556= 1.11 times

• Equity Multiplier = TA/TE = 1+D/E- 1=1.11= 2.11

• Long-term debt ratio = LTD/(LTD=TE)- 843/(843=2556)= 24.80%

• Times Interest Earned= EBIT/Interest- 1138/7= 162.57 times

Asset management or turnover ratios

Computing Receivables ratios• Receivables Turnover= Sales/Accounts=

Receivable- 5000/956= 5. 23 times

• Days’ Sales in receivables = 365/ Receivales Turnover- 365/5.23= 70 days

Asset management or turnover ratios

Computing Inventory ratios• Inventory Turnover = Cost of Goods

Sold/Inventory- 2006/301= 6.66 times

• Days’ Sales in Inventory = 365/Inventory Turnover- 365/6.66 = 55 days

Asset management or turnover ratios

Computing Inventory ratios• Total Asset Turnover= sales/Total Assets

- 5000/5394= 93- it is not unusual for TAT <1, especially if a firm has a large amount of fixed assets

• NWC Turnover = Sales/NWC- 5000/(2256-1995)= 19.16 times

• Fixed Asset Turnover= Sales/NFA- 5000/3138= 1.59 times

Profitability Measures

• Profit Margin= Net Income/Sales- 689/5000= 13.78%

• Return on Assets (ROA) = Net Income/Total Assets- 689/5394 = 12.77%

• Return on Equity (REO) = Net Income/Total Equty- 689/2556= 26.96%

Computing Market Value Measures

• Market Price = $ 87.65 per share• Shares outstanding = 190.9 million• PER ratio = Price per share/Earnings

per share- 87.65/3.61 = 24.28 times

• Market-to-book ratio = market value per share/book value per share- 87.65/ (2556/190.9) = 6.56 times

Harley-Davidson, Inc. Ratio Analysis1. Liquidity ratios 2002 2003 Average industries

Current ratioAcid-test ratioCash ratio

1.138335

1,51,0650

2. Financial leverage ratio

Total Debt ratioDebt/Equity ratioEquity multiplierLong term debt ratioTime interest earned

52.61%1.112.11

24.80%162.57

48%98

2.0120.04%154.46

3. Turnover ratio

Total assets turnoverAccount receivable turnoverInventory turnoverFixed assets turnover

935.236.661.59

1.28.117.051.66

4. Profitability ratios

Net profit marginReturn on AssetsReturn on Equity

13.78%12.77%26.96%

14.04%16.86%35.56%

Using the DuPont Identity

ROE = PM * TAT * EMROE = Net Income/sales x sales/assets x assets/Equity

- Profit margin is a measure of the firm’s operating efficiensy- how well does it control costs

- total asset turnover is a measure of the firm’s asset use efficiency-how well does it manage its assets- Equity multiplier nis a meausre of the firm’s financial leverage

Expanded Dupont Analysis-Aeropostale data• Balance Sheet Data • income Statement Data

- cash= 138,356 - Sales= 734,868- inventory= 61,807 - COGS+ 505,152- other CA = 12,284 - SG&A = 141,520- fixed assets = 94, 601 - interest = (760)- equity = 185, 640 - taxes = 34, 702• Computations • Computations

- TA = 307,048 - NI= 54,254- TAT = 2. 393 - PM= 7,383%- EM = 1.654 - ROA= 17.668% - ROE= 29.223%

Aeropostale Expanded DuPont ChartROE = 29.22%

17,668 11,654

TAT=2,393PM= 7,383%

NI=54,254 Sales=734,868 Sales=734,868 TA=307,048

Sales= 680,614 TC=734,868

COGS= 505, 152

Interest= (760)

SG&A= 141,520

Taxes= 34,702

Fixed Assets=94601 Current Assets= 212,447

Inventory= 61,807

Other CA=12,284

Cash= 138,356

ROE = net income x sales x assets sales assets equty

= 54,254 x 734, 868 x 307, 048 734,868 307,048 185, 640

= 07383 x 2.3933 x 1.6540

= 29.2%

• As we study the figure, we quickly see that improvement in the ROE can common in one or more of four ways:1. Increase sales without a disproportionate increase in cost and

expenses2. Reduce COSGS or operating expences3. Increase the sales relative to the asset base, either by increasing

sales or by reducing the amounts invesred in company assets. From our earlier exammination of Harley-Davidson, we learned that the firm had excessive account receivables and fixed assets. Thus management need to reduce these assets to the lowest in the return on which would in turn result in an increase in the return on assets and then the return on equity

4. Increase the use of debt relative to equity, but only to the extent tha it does not unduly jeopardize the firm’s financial position.

Limitations of ratio analysis1. It is sometimes diffcult to identify the industry category to which

a firm belongs when the firm enganges in multiple line of business

2. Published industry averages are only approximations and provide the user with general guidelines rather than scientifically determoned averages of the ratios of all or even a representative sample of the firms within an industry

3. Accounting practice differ widely among firms and can lead to differences in computed ratio

4. An industry average may not provide a desirable target ratio or norm

5. Many firm experience seasonality in their operation

Case

Chris was recently hired by S&S Air, Inc., to assist the company with its financial planning and to evaluate the company’s performance. Chris graduated from college five years ago with a finance degree. He has been employed in the finance departement of a fortune 500 company since then.

S&S Air was founded 10 years ago by friends Mark Sexton and Todd Story. The company has manufactured and light airplanes this period, and the company’s products have received high reviews for safety and reliability. The company has a niche market in that it sells primarily to individuals who own and fly their own airplanes. The company has two models; the birdie, which sells for $53,000, and the Eagle, which sells for $78,000.0

Although the company manufactures aircraft, its operations are different from commercial aircraft companies S&S Air builds aircraft to oredr. By using prefabricated parts, the company can complete the manufacture of an airplane in only five weeks. The company also receives a deposit on each order, as well as another partial payment before the order is complete. In contras, a commersial air plane may take one and one-half to two years to manufacture once the order is placedMark and Todd have provide the following financial statements. Chris has gathered the industry ratios for the light airplane manufacturing industry.

Sample Income Statement

Revenues $21,785,300Cost of of Goods Sold 15,874,700Expenses 2,762,500Depreciation 976,200EBIT 2,171,900Interest Expense 341,600Taxable Income 1,830,300Taxes 732,120Net Income 1,098,180

Dividends $439,272 Add to retained earning 658,908

Sample Balance Sheet

CashA/RInventory

Total CA

Net FATotalAssets

2006

$315,000506,000740,800

$1,561,80011,516,000

13,077,800

2006A/P

$635,000N/P 1,450,000

Total CL 2,085,000LT Debt 3,800,000 Common stock 250,000R/E 6,942,800Total Liab. 13,077,800& Equity

Light Airplane Industri ratiosLower Median Upper

1 Current ratio 0.50 1.43 1.89

2 Quick ratio 0.21 0.38 0.62

3 Cash ratio 0.08 0.21 0.39

4 Total Assets turnover 0.68 0.85 1.38

5 Inventory turnover 4.89 6.85 10.89

6 Receivables turnover 6.27 9.82 14.11

7 Total debt 0.44 0.52 0.61

8 Debt-Equity ratio 0.79 1.08 1.56

9 Equity multiplier 1.79 2.08 2.56

10 Time interest earned 5.18 8.06 9.83

11 Profit margin 4.05% 6.98% 9.87%

12 Return on assets 6.05% 10.53% 13.21%

13 Return on equity (ROE) 9.93% 16.54% 26.15%

Question

1. Using the financial statements provided for S&S Air, calculate each of the ratios listed in the table for the light aircraft industry.

2. Compare the performance of S&S Air to the industry, for each ratio, comment on why it might be viewed as positive or negative relative to the industry. How do you think S&S Air’s ratio would compare to industry average?

TIME VALUE OF MONEY

TIME VALUE OF MONEY

• Future Value-Taking an amout and finding its value at sometime in the future

• Present Value-Taking an anmout from sometime in the future and finding its value today.

Future Values

Future Value – Amount to which an invenstement

will grow after earning interest

Compound Interest – Interest earned on interest.

Simple Interest – Intrest earned only on the original

investment.

Future Values

Example – Simple InterestInterest earned at a rate of 6% for five years on a principal balance of $100

Today Future Years 1 2 3 4 5 Interest earnedValue 100 6 6 6 6 6

106 112 118 124 130

Value at the end of year 5 =$130

Future ValuesExample – Compound Interest

Interest earned at a rate of 6% for five years on the previous year’s balance

Today Future Years 1 2 3 4 5 Interest earnedValue 100 6 6.36 6.74 7.15 7.57

106 112.36 119.10 126.25 133.82

Value at the end of year 5 =$133.82

Future Values

Example-FV

1. What is the future value of$100 if interest is compounded annually at a rate 6% for five years?FV = $100 x (1+.06)5 = $133.82

2. What is the future value of $100 invested for five years at a nominal interest rate 12%, compounded continuosly?

FV = $100x(1+r)t

Compounding Periods

Compounding an investment m times a years for T years provides for future value of wealth:

FV = Co

for example, if you $50 for years at 12% compounded semi-annually, your investment will grow toFV = 6 =$70.93

Effective Interest Ratesreff= (1+r/m)m

- 1

Reff= (1+0,12/2)2

- 1 = 12,36%

Continuous Compounding :

reff = e m- 1

Reff = (2,71828)0,12- 1 = 12,75%

Dampak dari periode pemajemukan yang berbeda atas nilai masa depan $1.000, diinvestasikan dengan tingkat bunga nominal 8%

Jumlah Periode Pemajemukan

Future value pada akhir 1 th

Tingkat bunga tahunan efektif

$1.000 Tahunan $1.080,00 8,00%$1.000 Semi tahunan $1.081,60 8,16%$1.000 4 bulanan $1.082,43 8,24%$1.000 Bulanan $1.083,00 8,30%$1.000 Harian $1.083,28 8,32%$1.000 Berkelanjutan $1.083,29 8,33%

How Long is the wait?If we deposit $5,000 today in an account paying 10% how long does it take to grow to $10,000?

FV = Co x (1+r)T $10,000=$5,000x(1.10)T

(1.10)T = $10,000 = 2 $5,000

ln(1.10)T = ln 2

T = ln 2 = 0.6931 = 7,27 years ln (1.10) 0.0953

What Rate Is Enough?Assume the total cost of a college education will be $50,000 when your child enters college in 12 years. You have $50,000 to invest today. What rate of interest must you earn on your investment to cover the cost of your child’s education ? About 21.15%

FV = Co x (1+r)T $50,000=$5,000 x (1.r)12

(1.r)12 =$50,000=10 (1+r)101/12

$5,000 r =101/12 = 1 = 1.2115 = 1 = 2115

What is the future value three years hence of $1.000 invested in an account with a stated annual interest rate of 8%

a. Compounded annuallyb. Compounded semiannuallyc. Compounded monthlyd. Why does the future value increase as the

Compounding period shortens

Present Values

Present Value

Value today of a future cash flow.

Discount factor

Present value of a $1 future payment.

Discount Rate

Interest rate used to compute prent values of future cash flows.

TIMES VALUE OF MONEY(APPLICATIONS) The PV formula has many application, you

can solve for the remaining variable.

PV = FV x 1 (1+r)t

What is the present value of $ 100 to be received in 3 years if the appropriate interest rate 1s 10%, 15%, and 20%

PV = $100 x 1/(1,1)3 = $75,13

PV = $100 x 1/(1,15)3 = $65,75

PV = $100 x 1/(1,20)3 = $57,87

PV of Multiple cash Flows

Example your auto dealer gives you the choice to pay $15,500 cash now, or make three payments: $8,000 now and $4,000 at the end of the flowwing two years. If your cost of money is 8% wich do you prefer?

Immediate payment 8,000.00PV 1 = 4,000 = 3,703.70(1+.08)1

PV 2= 4,000 = 3,429.36(1+.8)2

Total PV = $15,133.06

Example

you are selling your house. The Smith have offered you $115.000. they will pay you immediately. The Joneses have offered you $150.000, but the cannot pay you until theree years from today. The interest rate is 10 percent. Which offer should you choose?

you have the opportunity to make invesment that cost $900.000. if you make the investment now, you will receive $120.000 and three years from today, respectively. The appropriate discount rate for this invesment is 12%. Should you make invesment?

You are given three invesment alternatives to anlyze. The cach flows from these three invesments are follows:

END OF YEAR A B C1 $5,000 $1,000 $10,000

2 $5,000 $3,000 $10,000

3 $5,000 $5,000 $10,000

4 -$15,000 $10,000 $10,000

5 $15,000 $10,000 -$40,000

What is the present value of each of these three invesments if 10 percent is the appropriate discount rate?

Perpetuities & Annuities

Annuity = Equally spaced level stream of cash flows for a limited period of time.

Perpetuity = A stream of level cash payments that never ends.

Annuities

FV of Annuity Formula

C = cash paymentr = interest ratet = Number of years cash payment is received

FVAN = C X (1 + r)t - 1

r

Annuities

Example – future Value of annual paymentsYou plan to save $4,000 every year for 20 years and then retire. Given a 10% rate of interest, what will be the FV of your retirement account?

FVAN = 4.000 x (1 + 0,10)20 - 1

0,10

FVAN = $229,100

Annuities

PV of Annuity Formula

C = cash paymentr = interest ratet = Number of years cash payment is received

PVAN = C x (1 – 1/(1+r)t

r

Annuities

Example – Annuitiesyou are purchasing a car. Your are scheduled to make 3 annual instllments of $4,000 per year. Given a rate of interest of 10%, what is the price you are paying for the car (i.e. what is the PV)

PVAN = 4.00 x 1- 1/(1+0,1)3

0,1

PVAN = $9.947,41

Annuity: Example

Your insurance agent offers to sell you an annuity. It will pay you $400 per for five years. Your requred rate of return is 7%. How much will you be willing to pay?

0 1 2 3 4 5 6 ….. ……… …..…. ...……. ……… ...…

400 400 400 400 400

PV = = $1,640.08

Annuity: ExampleYour insurance agent offers to sell you an annuity. It will pay you $400 per for five years beginning of each years. Your requred rate of return is 7%. How much will you be willing to pay?

0 1 2 3 4 5 6 …... ……….. ….……. ….……. ...…….. ……

400 400 400 400 400

PAVN = C x (1 – 1/(1+r)t x (1 + r) r

PV = = = $1,724.85

Your company is considering leasing $120.000 piece of equipment for the next 10 years. The annual lease payments of $15.000 are due beginning of each year. The buy the equipment for $25.000 at the end of the leasing period. Should your company accept the lease offer if appropriate discount rate is 8 percent a year?

Perpetuities

PV of Perpetuity Formula

c = cash paymentr = interest rate

PV = c r

Perpetuities & Annuities

Example – Annuitiesin order to create an endowment, which pays $100,000 per year, forever, how much money must be set aside today in the rate of interest is 10% ?

PV = 100,000= $1,000,000 10

The market interest rate is 15 percent. What is the price of a consol bond that pays $120 annually ?

Perpetuities & Annuities

Example –continued

if the first perpetuity payment will not be received until three years from today, how much money needs to be set aside today?

PV = 1,000,000 = $751,315 (1+.10)3

Inflation

Inflation – Rate at which prices as a whole are increasing.

Nominal Interest Rate – Rate at which money inveted grows.

Real Interest Rate – Rate at which the purchasing power of an investment increases.

Inflation

1 + real interest rate = 1+nominal interest rate 1+inflation rate

Approximation formula

Real int. rate = nominal int. rate – inflation rate

Questions and Problem

1. Ellen, a sophmore mechanical engineering student, receives a call from an insurance agent, who believes that Ellen is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as fllows:

If Ellen could earn 12 percent on her money by placing it in savings account, should she place it instead in any of the annuities? Which ones, if any? Why ?

Annuity Initial payment into annuity (At t=0)

Amount of money received year

Duration of Annuity(Years)

A $50,000 $8,500 12

B $60,000 $7,000 25

C $70,000 $8,000 20

Questions and Problem

2. You are triying to plan for retirement in 10 years and currently you have $150,000 in savings account and $250,000 in stock. In addition, you plan to add to your savings by depositing $8,000 per year in your saving account at the end of each of the next five years and then $10,000 per year at the end of each year for the final five years until retirement.

a. Assumsing your savings account returns 8 percent compounded annually and your investment in stocks will return 12 percent compounded annually, how much will you have at the end of 10 years? (ignore taxes)

b. if you expect to live 20 years after you retire, and at a retirement you deposit all of your savings in a bank account paying 11 percent, how much can you withdraw each year after retirement (20 equal withdrawls beginning one year after you retire) to end up with zero-balance at death?

CAPITAL BUDGETING

What Is Capital Budgeting Capital budgeting involves the decision making

process with respect to investment in fixed assets; specifically, it involves measuring the incremental cash flows associated with investment proposals and evaluating the attractiveness of these cash flows relative to the project’s costs

Capital budgeting is decision process that managers use to identify those projects that add to the firm’s value, and as such it is perhaps the most important task faced by financial managers and their staffs.

First, a firm’s capital budgeting decisions define its strategic direction, because moves into new products, services, or markets must be preceded by capital expenditures.

Second, the results of capital budgeting decisions continue for many years

Thied, poor capital budgeting can have serious finacial consequences.

Projects Classifications

1. Replacement – Worn out equipment2. Replacement – Reduce costs3. Expansian of existing produkcts or markets4. Expansion into new products or markets5. Safety/environmental projects6. Recearch and Developments7. Other

JENIS-JENIS PROYEK Independent Projects: if the cash flows of one

are unaffected by the acceptance of the other. Acceptance or rejection of project depends upon merits of project compared to decision criteria.

Mutualli Exclusive Prjocts: if the cash flows of one can be adversely impacted by the acceptance of the other.The acceptance of one project excludes the possibility of accepting the other(s)

An Example of Mutally Exclusive Projects

BRIDGE vs BOATto get products across a river

Some Alternative InvesmentRules

• Payback Period• Discounted Payback• Net Present Value (NPV)• Profitability Index• Internal Rate of Return• Modified internal rate of Return (MIRR)

Payback Period

• How long does it take to get the initial cost back in a nominal sense?

• Computation Estimate the cash flows Subtract the future cash flows from the initial cost

until the initial investment has been recovered• Decision Rule - Accept if the payback period

is less than some preset limit

Net Cash Flows for Projects S and L

Project S : 0 1 2 3 4-1,000 500 400 300 100

Project L : 0 1 2 3 4-1,000 100 300 400 600

Payback S = 2 + $100/$300= 2.33 yearsPayback L= 3 + $200/$600 = 3.33 years

Advantages and Disadvantages of Payback

Advantages Disadvantages

Easy ro undersand ignore the time value of money

adjusts for uncertainly of later cash flows

requres an arbitrary cutoff point

Biased towards liquidity Ignores cash flows beyond the cutoff dateBiased againt long-term projects, such as recearch and development, and new projects

Discounted Payback Period

• Compute the present value of each cash flow and then determinane how long it takes to Payback on a discounted basis

• Compare to a specified required period• Decision Rule – Accept the project if it pays

back on a discounted basis within the specified time

Projects S and L: Discounted Payback Period

Project S : 0 1 2 3 4-1,000 500 400 300 100

Disc. NCF (at 10%) -1,000 455 331 225 68

Project L : 0 1 2 3 4-1,000 100 300 400 600

Disc. NCF (at 10%) -1,000 91 248 301 410

Payback S = 2 + $100/$300= 2.33 yearsPayback L= 3 + $200/$400 = 3.33 years

Net Present Value

NPV= -Co + C + C +….+ C = -Co + C

(1+r) (1+r)2 (1+r)N (1+r)T

Net Present Value – Present value of cash flows minus initial invesments

Opportunity Cost of Capital – Expected rate of return given up by investing in a project

The Net Present Value Method :

Minimum Acceptance Criteria: Accept if NPV > ORanking Criteria: Choose the highest NPV

Net Present Value

Equal to or greater than zero

Accept the inevestment

Reject the investmentLess than zero

Net Present Value (NPV)NPV = -1,000 + 500 400 300 100

(1+0,10)1 (1+0,10)2 (1+0,10)3 (1+0,10)4 =78.82

Cash Flows 0 1 2 3 4

-1000 500 400 300 100

454.55

330.58

225.39

68.30

Net Present Value 78.82

NPV – Decision Rule

• A positive NPV means that the project is expected to add value to the firm and will therefore increase the wealth of the owners.

• Since our goal is to increase owner wealth, NPV is a direct measure of how well this project will meet our goal.

Goo Attributes of the NPV Rule

1. Uses csh flows2. Uses ALL cash flows of the project3. Discounts ALL cash flows properly

Reinvestment assumption: the NPV rule assumes that all cash flows can be reinvested at the discount rate.

Profitability Index (PI)

PI = Total PV of Future Cash FlowsInitial Investment

Pls = $1,078.82/$1,000=1.079 Minimum Acceptance Criteria:

Accept if PI > 1 Ranking Criteria:

select alternative with highest PI

Profitability Index (PI)

• Disadvantages problem with mutually exclusive invesments

• Advantages: maybe usesful when available invesment

funds are limited Easy to undersantand and communicate Correct decision when evaluating independent

projects

Internal Rate of Return (IRR)

• Definition : IRR is the return that makes the NPV= 0

• Decision Rule: Accept the project if the IRR is greater than the required return

CFo + CF1 + CF2 +……+ CFn = 0

(1+IRR) (1+0,10)2 (1+IRR)n

- 1,000 + 500 + 400 + 300 + 100 + = 0 (1+r) (1+r)2 (1+r)3 (1+r)4

IRRs = 14.5%

CFo + CF1 + CF2 +……+ CFn = 0

(1+IRR) (1+0,10)2 (1+IRR)n

- 1,000 + 100 + 300 + 400 + 600 + = 0 (1+r) (1+r)2 (1+r)3 (1+r)4

IRRL = 14.8%

NPV Vs. IRR

• NPV and IRR will generally give us the same decision

• Exceptions non-conventional cash flows – cash flow

signs change more than once Mutually exclusive projects

• initial invesments are substantially different• Timing of cash flows is substantially different

Example - Non – conventional Cash flows

• Suppoese an investment will cost $90,000 initially and will generate the following cash flows: Year 1: 132,000 Year 2: 100,000 Year 3:-150,000

• The required return is 15%• Should we accept or reject the

project?

IRR and Mutually Exclusive Projects

• Mutually exclusive projects If you choose one, you can’t choose the other Example: you can choose to attend graduate scholl

at either Havard or Standard, but not both• Intuitively you would use the following

decision rules: NPV – choose the project with the higher NPV IRR - choose the project with the higher IRR

Example With Mutually Exclusive Projects

The required return for both projects is

10%

Which project shouldyou accept and why?

Period Project A Project B

0 -500 -400

1 325 325

2 325 200

IRR 19.43% 22.17%

NPV 64.05 60.74

Conflicts Between NPV and IRR

• NPV directly measures the increase in value to the firm

• Whenever there is a conflict between NPV and another decision rule, you should always use NPV IRR is unrealiable in the following situations non-conventaional cash flows Mutually exclusive projects

Managers like rates—prefer IRR to NPV comparisons. Can we give them

• Yes, MIRR is the discount rate that causes the PV of a projec’ts terminal value (TV) to equal the PV of cost. TV is found by compounding inflows at WACC

• Thus, MIRR assumes cash inflow are reinvested at WACC.

PV of costs= terminal Value (1 + MIRR)

Modified Internal Rate of Return

Your division is considering two invesment projects:

a. Compute the payback, discounted payback, NPV, PI, IRR, and MIRR for the following two projects. Assume the required return is 10%

b. If two project mutually exclusive and COC 5%, which project should the firm undertake?

c. If two project mually eclusive and COC 15%, which project should the firm undertake?d. What is the crossover rate?

Year Project A Project B

0 -$25 -$25

1 5 20

2 10 10

3 15 8

4 20 6

Case • Your first assigment in your new position as assistant financial analyst at Caledonia

Products is to evaluate two new capital-budgeting proposals. Because this is your first assigment, you have been asked not only to provide a recommendation, but also to respond to a number budgeting process. This is a standard procedure for all new financial analysts at Caledonia and will serve to determine whether you are moved directly into the capital-budgeting analysis departement or are provided with remedial training. The memorandum you received outlining your assgment follows:to : The New Financial Analystfrom : Mr. V. Morrison, CEO, Caledonia ProductsRE : capital-budgeting analysisprovide an evaluation of two proposed projects, both with five-year expected lives and identical initial outlays of $110,000. Both of these projects involeve addition to Caledonia’s highly successful Avalon product line, and as a result, the required rate of return on both projects has been established at 12 percent. The expected free cash flows from each project are as follows:

In evaluating these projects, please respond to the following quetsions:a. Why is the capital-budgeting process so important?b. Dtermine the payback, discounted payback, NPV, PI, IRR and MIRR, should they

be accepted?c. What would happen to the NPV and PI, if the required rate of return

increased? If the required rate of return decreased?d. How does a change in the required rate of return affect the project’s IRR?

Project A Project B

Initial Outlay -$110,000 -$110,000

Year 1 20,000 40,000

Year 2 30,000 40,000

Year 3 40,000 40,000

Year 4 50,000 40,000

Year 5 70,000 40,000

The Dilemma at Day-Pro• the Day-Pro Chemical Corporation, established I 1995, has managed

to earn a consistently high rate of return on its investments. The scret of its success has been strategic and timely development, manufacturing, and marketing of innovative chemical product that have been used in various industries. Currently, the management of the company is considering the manufacture of a thermosetting resin as packaging material for electronical products. The company’s recearch an development teams have come up produce initially but would have greater economies of scale. At the initial presentation, the project leaders of both teams presented their cash flow projections and provided sufficient documentation in support of their proposals. However. Since the products are mutually exclusive, the firm can only fund one proposal.

• In order to resolve this dilemma, Tim Palmer, the Assistant Treasurer, and a recent MBA from a prestigious mid-western university, has been assigned the task of analyzing the costs and benefits of the two proposals and presenting his findings to the board of directors. Tim knows that this will be an uphill task, since comes to financial concepts. The Boar has historically had a strong preference for using rates of return as its decision criteria. On occasion it has also used the payback period approach to decide between competing projects. However, Tim is convinced that when net present value (NPV) method is least flawed and when used correctly will always add the most value to a company’s wealth.

• After obtaining the cash flow projections for each project (see Tables 1 & 2), and crunching out the numbers, Tim realizes that the hill is going to be steeper than he thought. The various capital budgeting techniques, when applied to the two series of cash flows, provide inconsistent results. The project with the higher NPV has a longer payback period, as a lower Accounting rate of Return (ARR) and Internal Rate of return (IRR). Tim scratches his head, wondering how can convince the Board that the IRR, ARR, and payback often lead to incorrect decisions.

• The day-Pro Chemical Corporation, established I 1995, has managed to earn a consistently high rate of return on its invesments. The scret of its success has been strategic aand timely development, manufacturing, and marketing of innovative chemical products that have been used in various industries. Currently, the management of the company is considering the manufacture of a thermosetting resin as packaging material for electronic products. The company’s Recearch and Development teams have come up presentations and provided sufficient documentation in support of their proposals. However, since the products are mutually exclusive, the firm can only fund one proposal.in order to resolve this dilemma, Tim Palmer, the Assistant Treasurer, and a recent MBA from a presentigious mi-western university, has been assigned task of analyzing the costs and benefits of the two proposals be an uphill task, since the board members are not all on the same page when comes to financial concepts.

The Board has historically had a strong preference for using rates of return as its decision creteria. On occasion it has also used the payback period approach to decide between competing projects. Howerer, Tim is convinced that the net present value (NPV) method is least flawed and when used correctly will always add the most value to a company’s wealth.after obtaining the cash flow projections for each project (see Table 1&2) and crunching out the numbers, Tim realizezs that the hill is going to be steeper to the two series of cash flows, provide inconsistent results. The project with the higher NPV has a longer payback period, as well as a lower Accounting Rate of Return (ARR) and Internal Rate of Return (IRR). Tim scratches his head, wondering how he can convince the Board that the IRR, ARR, and payback Period can lead to incrorrect decision.

Syntetic Resin Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Net Income 150,000 200,000 300,000 450,000 500,000

Depreciation 200,000 200,000 200,000 200,000 200,000

Net cash flow (1000,000) 350,000 400,000 500,000 650,000 700,000

Epoxy Resin Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Net Income 440,000 240,000 140,000 40,000 40,000

Depreciation 160,000 160,000 160,000 160,000 160,000

Net cash flow (800,000) 600,000 400,000 300,000 200,000 200,000

Questions 1. Calculate the payback period of each project. Expalin what argument

Tim should make to shaow the payback period is not appropriate is this case.

2. Calculate the Discounted Payback Period (DPP)using 10% as the discount rate. Should the tim ask the board to use DPP as the deciding factor? Explain.

3. Calculate the two project’ IRR. How should Tim convince the Board that the NPV method is the way to go?

4. Explain how Tim can show that the Modified Internal Rate of Return (MIRR) is the more realistic measure to use in the case of mutually exclusive projects

5. Calculate the Profitability for each proposal. Can this measure help to solve the dilemma? Explain.

CAPITAL BUDGETING AND CASH FLOW ANALYSIS

PROSES PENGANGGARAN MODAL1. Tentukan biaya proyek2. Perkirakan aliranb kas yang diharapkan dari proyek, termasuk

nilai akhir aktiva3. Risiko dari lairan kas proyek harus dietimasi. (memakai distribusi

probabilitas aliran kas)4. Dengan mengetahui risiko dari proyek, manajemen harus

menentukan biaya modal (cost of capital) yang tepat untuk mendiskon aliran kas proyek

5. Tentukan nilai sekarang aliran kas masuk yang diharapkan digunakan untuk memperkirakan nilai aktiva.

6. Terakhir, nilai sekarang dari lairan kas yang diharapkan dibandingkan dengan biayanya.

HAL PENTING DALAM ESTIMASI ALIRAN KAS

1. Keputusan dalam capital budgeting harus didasarkan pada aliran kas setelah pajak.

2. Hanya memeperhatikan incremental cash flow yang relevan.

3. Memperhatikan aliran kas yang timbul karena keptusan investasi, aliran kas dari keputusan pendanaan tidak perlu diperhatikan (ex: bunga, cicilan, deviden)

4. Tidak memasukan sunk cost (biaya yang telah terjadi)5. Opportunity cost harus diperhitungkan secara tepat

dalam analis penganggaran modal.

Project Cash Flows

• Initial outlay. This include the cost of the fixed assets associated with the project plus any initial invesment in net operating working capital, such as raw materials

• Opertaing cash flow. The operating cash flow is the net operating profit after taxes plus depreciation

• Terminal cash flow. At the end of the project’s life. Usually generated from: salvage value of the fixed assets, adjusted for taxes if the assets are not sold at their book value, return of net operating working capital

Project Cash FlowsWhen deciding whether or not to make an invesment, we must first

estimate the cash flows that the invesment will provide Generally, these cash flows can be categorized as follows:

the initial outlay (IO) operating cash Flows The terminal cash flows (TCF)

Operating Cash flow

Initial terminalOutlay cash flow

0 1 2 3 4 5 6

Sebagai manejer keuangan yang baru ditunjuk di Blooper Industries, Anda akan menganalisis sebuah proposal penambangan dan penjualan biji magnisium kelas satu yang langka. Proyek ini memerlukan investasi $10 juta. Setelah 5 tahun kandungan biji magnesium habis, metode penyusutan adalah garis lurus, dengan nilai buku pada kahir tahun menjadi nol. Pada tahun ke enam peralatan mungkin dapat dijual senilai $2 juta. Untuk itu perusahaan dikenal tagihan pajak pada tahun ke enam senilai 35%+ x $2= $0.70. sehingga arus kas bersih dari penjualan aktiva tahun ke enam adalah $2- $0.7= $1.3 juta. Ramalan modal kerja dari Blooper Industries adalah sbb:

Perusahaan memperkirakan mampu menjual 750.000 pon magnesium per tahun dengan harga $20, harga akan meningkat sesuai dengan tingklat inflasi, beban operasi diperkirakan sebesar 2/3 dari pendapatan. Tingkat inflasi 5%, dari tarif pajak 35%. Tentukan Cash Flows

0 1 2 3 4 5 6Piutang $0 $2.500 $2.625 $2.756 $2.894 $3.039 $0Persediaan 1.500 1.575 1.654 1.736 1.823 0 0M. kerja 1.500 4.075 4.279 4.493 4.717 3.039 0

0 1 2 3 4 5

A. Aktiva Tetap

Investasi aset tetap -100.000

Penjualan asset tetap 21,758

Opportunity cost -150,000 150,000

Arus kas, investasi aset tetap -250,000 171,758

B. Modal Kerja

Modal kerja 10,000 10,000 16,320 24,969 21,224 0

Perubahan modal kerja 10,000 0 6,320 8,649 -3745 -21,224

Arus kas investasi modalkerja -10,000 0 -6,320 -8,649 3,745 21,224

C. Operasi

Pendapatan 100,000 163,200 249,696 212,242 129,892

Beban operasi 50,000 88,000 145,200 133,100 87,846

Depresiasi 20,000 32,000 19,200 11,520 11,520

Laba sebelum pajak 30,000 43,200 85,296 67,622 30,526

pajak 10,200 14,688 29,000 22,991 10,526

Laba setelah pajak 19,800 28,512 56,296 44,631 20,147

Arus kas dari operasi 39,800 60,512 75,496 56,151 31,667

D. Penilaian

Total arus kas proyek -260,000 39,800 54,192 66,847 59,896 224,649

NPV (DF 12%) 5,475

Analisis Arus kas Proyek PenggantianPT Tekstil membeli mesin pintal 10 tahun yang lalu dengan $75.000. mesin tersebut memiliki usia ekonomis selama 15 tahun dan sisusutkan dengan metode garis lurus, tanpa nilai sisa. Jadi nilai buku mesin saar ini adalah $25.000. perusahaan merencangkan akan mengganti mesin lama dengan mesin baru. Mesin baru yang sejenis dapat dibeli dengan harga $120.000, dengan usia ekonomis 5 tahun, disusutkan dengan MACRS. Nilai sisa jika dijual rugi $15.000. pajak perusahaan 40%. Apabila penggantian itu dilakukan dapat menghemat biaya sebesar $50.000 per tahun. Buatlah estimasi cash flow selama 5 tahun. Apakah proyek layak dijalankan, bila biaya dana 20%

Th Penyusutan Nilai buku0 $120,000 1 20,00% x $120,000 = 24,000 $96,0002 32,00% x$120,000 = 38,400 57,600

3 19,20% x $120,000 = 23,040 34,560

4 11,52% x $120,000 = 13,824 20,736

5 11,52% x $120,000 = 13,824 6,912

Tabel: Estimasi Arus Kerja

keterangan Tahun 0 1 2 3 4 5

Initial cash flow

– Harga mesin baru– Penjulan mesin lama– Tax saving (40%x$15.000)

-120.00010.000

6.000

Operating

– Penghematan biaya– Dep mesin baru– Dep mesin lama– Tambahan penyusutan– Laba sebelum pajak– Pajak – Laba bersih – Operating cash flow

50.00024.000

5.00019.00031.00012.40018.60037.600

50.00038.400

5.00033.40016.600

6.6409.960

43.360

50.00023.040

5.00018.04031.96012.78419.17637.216

50.00013.824

5.0008.824

41.17616.47024.70633.530

50.00013.824

5.0008.824

41.17616.47024.70633.530

Terminla cash flow

– Nilai sisa mesin baru 6.912

Proyeksi cash flow -104.000 37.600 43.360 37.216 33.530 40.442

NPV (DF 20%) 11,404

Soal

Scoty Corporation pembuat komponen elektronik. Scoty mempertimbangkan untuk mengganti satu mesin perakit yang dioperasikan dengan tangan dengan mesin baru nyang otomatis. Mesin perakit tersebut dibeli 5 thaun yang lalu dengan harga $50,000, umur ekonomis 10 tahun. Harga mesin baru $60,000, usia ekonomis 5 tahun, tanpa nilai sisa

Buatlah estimasi cash flows, apakah proyek layak dijlankan bila biaya dana 16%

Situasi sekarang(mesin perakit manual)

Situasi yang diajukan(mesin perakit otomatis)

Gaji operator $25,000 Gaji operator 0

Biaya perawatan/thn 2,000 Biaya pemasangan $3,000

Biaya kerusakan/thn 6,000 Biaya pengiriman $3,000

Depresiasi tahunan 5,000 Biaya perawatan/thn $3,000

Nilai jual sekarang 5,000 Biaya kerusakan/thn $3,000

Tingkat pajak 34% Usia yang diharapkan 5 tahun

Nilai jual akhir tahun ke 5 20,000

Tabel: Estimasi Arus Kas

Keterangan Tahun

0 1 2 3 4 5

Initial cash Flow1. Harga mesin baru ditambha

pemasangan & pengiriman2. Penjualan mesin lama3. Tax saving 34%(25,000-5.000)

-66.000

5.0006.800

Operating cash flow4. Pengurangan gaji operator5. Pengurangan biaya kerusakan6. Dep Mesin baru7. Dep mesin lama8. Tambahan penyusutan9. Tambahan biaya perawatan10. EBT (4+5-8-9)11. Pajak (34%)12. Laba bersih13. Operating cash flow (12=8)

25.0003,000

13.2005.0008,2001,000

18,8006,392

12,40820,608

25.0003,000

13.2005.0008,2001,000

18,8006,392

12,40820,608

25.0003,000

13.2005.0008,2001,000

18,8006,392

12,40820,608

25.0003,000

13.2005.0008,2001,000

18,8006,392

12,40820,608

25.0003,000

13.2005.0008,2001,000

18,8006,392

12,40820,608

Terminal cash flow14. Nilai jual mesin baru15. Pajak: 34%(20,000-0)

Proyeksi cash flow -54,200 20,608 20,608 20,608 20,608 33,808

NPV (DF 16%) 19,561

Problem

• PT. A sedang mempertimbangkan pembelian panggangan baru yang hemat energi. Panggangan ini berharga $40,000 dan akan disusutkan menurut skedul MACRS 3 tahun. Panggangan ini akan ndijual sebagai besi tua setelah 3 tahun senilai $10,000. panggangan ini tidak berdampak pada penerimaan tapi akan menghemat biaya energi sebesar $20,000. tingkat pajak 35%, dan biaya modal 12%.

• Apakah panggangan ini seharusnya dibeli?

The Unequal Lives Problem

• There are two ways to correctly deal with the unequal lives problem

The replacement chain approach The equivalent annual annuity approach

• Misalkan Anda harus memilih di antara 2 mesin, yang umurnya berbeda, tapi memiliki kapasitas iidentik dan melakukan pekerjaan yang persis sama.

Mesin mana yang sebaiknya dipilih ?

Biaya (ribuan dolar) PV pada 6%0 1 2 3

Mesin A 15 4 4 4 $25.69

Mesin B 10 6 6 $21.00

Memilih di antara 2 proyek yang mutually exclusive

Jika discount rate = 10%NPV proyek A = $928,11NPV proyek B = $612,32

EAA untuk proyek A = $213,11EAA untuk proyek B = $246,21

0 1 2 3 4 5 6NPV B1 =612,32 NPV B2=612,32PV =460.03

1.072,35

Tahun Proyek A Proyek B

0 -$4.000 -$2.000

1 800 7002 1.400 1.300

3 1.300 1.200

4 1.2005 1.1006 1.000

Metode Penyusutan

• Metode garis lurus: metode penyusutan yang mengalokasikan biaya secara merata selama usia penyusutan aktiva

• Sum of year’s digit method: metode penyusutan dengan penjumlahan angka tahunan

• Double decline balance method: dengan formulasi 2(1/n) NBV

• MACRS : dengan menggunakan tabel tarif MACRS berikut:

Tahun Kelas Properti

Pemulihan 3 tahun 5 tahun 7 tahun 10 tahun

1 33,33% 20,00% 14,29% 10,00%

2 44,45% 32,00% 24,49 18,00%

3 14,81% 19,20 17,49% 14,40%

4 7,41% 11,52% 12,49% 11,52%

5 11,52% 8,93% 9,22%

6 5,76% 8,93% 7,37%

7 6,55%

8 6,55%

9 6,55%

10 6,55%

11 3,28%

Total 100,00% 100,00% 100,00% 100,00%

Capital Rationing(limit set on the amount of funds available for investment)

• Firms should implement all positive NPV projects this will maximize shareholder wealth

• Firms often limi the projects that are considerations

• Capital Rationing: process of limiting availability of capital dollars

Capital RationingAnggaplah biaya modal 10%, dan perusahaan memiliki sumber daya total $20 juta, saat ini perusahaan dihadapkan pada beberapa proposal proyek sbb:

Karena dana terbatas $20 juta, maka Proyek yang dipilih: L,J,M, dan NJika dana terbatas 10 juta, proyek mana yang dipilih?

Proyek Arus kas (jutaan dolar) PV(DF10%)

IndeksProfitabilitas

investasi CF 1 CF 2

J -$3 $2.2 $2.42 $4 1/3=0.33K -$5 $2.2 $4.84 $6 1/5=0.2L -$7 $6.6 $4.84 $10 3/7=0.43M -$6 $3.3 $6.05 $8 2/6=0.33N -$4 $1.1 $4.84 $5 ¼=0.25

Capital RationingHat company is considering seven capital investment propoasl, for which the funds available are limited to a maximum of $12 million. The projects are independent and have the following cost and profitability index associated with them:

Under strict capital rationing, which projects should be selected ?

Project Cost PIA $4,000,000 1,18B 3000,000 1,08C 5,000,000 1,33D 6,000,000 1,31E 4,000,000 1,19F 6,000,000 1,20G 4,000,000 1,18

Study ProblemsJack tar, CFO sheetbend Inc, membuka amplo rahasia perusahaan. Isinya adalah draft tawaran untuk kontrak memasok kanvas ransel pada angkatan Laut AS. Surat memo dari CFO sheetbend meminta mengkaji tawaran itu sebelum diajukan.

Tawaran dan dokumen pendukungnya disiapkan oleh staf penjualan sheetbend. Sheetbend diminta memasok 100.000 yard kanvas ransel selama 5 tahun, dengan harga jual adalah tetap sebesar $30 per yard

Tn. Tar tidak biasanya terlibat dalam penjualan. Tapi tawaran ini tidak akan berkomitmen pada Sheetbend dengan kontrak jangka panjang dan harga tetap. Kedua memproduksi kanvas ransel membutuhkan $1.5 Tar mulai bekerja pada akhir minggu mengumpulkan fakta dan asumsi sbb:

- Pabrik di Oleasantoro dibangun tahun 1900 an dan sekarang menganggur. Pabrik ini diusutkan penuh di permukaan Sheetbend, kecuali biaya pembelian tanah (19470 senilai $10,000

- Sekarang tanah itu adalah properti pinggir pantai yang bernilai. Tar berfikir tanah dan pabrik yang menganggur itu bisa dijual dalam waktu dekat dengan harga $600,000

- Merenovasi pabrik akan berbiaya $500,000. invetasi ini akan diusutka secara garis lurus selama 10 tahun

- Mesin baru akan berbiaya $1 juta. Investasi ini bisa diusutkan secara garis lurus selama 5 tahun

- Pabrik yang direnovasi dan mesin baru akan berusia bertahun-tahun. Akan tetapi, pasar yang tersisa untuk kanvas ransel itu kecil, dan tidak jelas apakah order tambahan bisa diperoleh begitu kontrak AL berakhir. Mesin ini khusus dan hanya nbisa digunkan untuk kanvas ransel . Nilai jual bekasnya diakhir tahun ke lima mungkin nol.

- Modal kerja pada awal tahun adalah $300.000, dan modal kerja ini diperkirakan 10% dari total pendapatan.

- Ramalan laba staf penjualan dari kontrak AL, dapat dilihat pada tabel 1

- Saat ini ada tawaran dari penjualan dari perusahaan pengembang real estate untuk membeli tanah dan pabrik Pleasantboro milik Sheetbend dengan harga $1,5 juta tunai

Tabel 1Dalam Ribuan

Apakah Tn. Tar seharusnya merekomendasikan mengajukan tawaran pada AL pada harga proposal $30 per yard?. Tingkat dikonto untuk proyek 12%

1 2 3 4 5

1. Penjualan (yard) 100 100 100 100 100

2. Harga per yard $30 $30 $30 $30 $303. Pendapatan ($) $3,000 $3,000 $3,000 $3,000 $3,0004. Harga pokok penjualan 2,100 2,184 2,271 2,362 2,457

5. Arus kas operasi (3-4) 900 816 729250 638 543

6. Penyusutan 250 250 250 250 250

7. Laba operasi (5-6) 650 566 479 388 293

8. Pajak (35%) 227,5 198,1 167,7 135,8 102,5

9. Laba bersih (7-8) $422,5 367,9 311,3 252,2 190,5

2. PT. “Dallas” sedang mengevaluasi proyek pembelian mesin baru. Harga mesin Rp 175 juta, dengan tambahan biaya pemasangan Rp 25 juta. Usia mesin adalah 5 tahun. Nilai buku mesin pada akhir tahun ke 5 adalah 0, tapi mesin masih dapat dijual sebagi besi tua dengan harga 5 juta. Mesin memerlukan tambahan modal kerja bersih Rp 10 juta, dan dengan penggunaan mesin tersebut dapat menghemat biaya sebelum pajak sebesar Rp 80 juta per tahun. Tingkat pajak adalah 15%. Haruskah mesin dibeli apabila biaya modal PT Dallas adalah 15% ?

INTRODUCTION TO RISK IN CAPITAL BUDGETING

What measure of risk is relevant in capital budgeting

• In capital budgeting, a project can be looked at on three levels:1. Stand-alone risk2. Corporate risk3. Systematic risk

Stand Alone RiskMengukur stand-alone risk berarti mengukur ketidakpastian keuntungan atau kepastian arus kas

E(CF) = 5.000 E(V)= 5.000

Ơ A=1.095 ƠB=894

Usulan Investasi A Usulan Investasi BProbabilitas Arus kas Probabilitas Arus kas

0,10 3,000 0,05 3,0000,20 4,000 0,20 4,0000,40 5,000 0,50 5,0000,20 6,000 0,20 6,0000,10 7,000 0,05 7,000

Apabila E(V) dari kedua investasi tidak sama, maka penggunaan Ơ sebagai indikator risiko menjadi sulit dilakukan, untuk itu digunakan coefficient of variation (CV) CV = Ơ/E(V) C D

E(V) 1.000 1.500

Ơ 400 500

CV 0,40 0,33

Problem • Misalkan saudara diminta untuk memilih salah satu diantara kedua proyek

berikut ini:

Pertanyaan:a. Dengan menggunakan NPV maksimum yang diharpkan, proyek mana yang

saudara pilih?b. Dengan menggunakan coenffidient of variation, proyek mana yang saudara

pilih?

A B

NPV Prob NPV Prob

$100 0,30 $300 0,30

$400 0,40 $500 0,40

$700 0,30 $700 0,30

Risiko Proyek

Beberapa metode yang bisa digunakan antara lain:a. Analisis Sensitivitasb. Analisis Scenarioc. Analisis Pohon Keputusand. Analisis Berak Even

Mean-standard deviation Analysis• Dilakukan dengan memasukan arus kas dari setiap kondisi

perekonomian, yang akan membentuk probabilitas untuk NPV kemudian menghitung probabilitas untuk NPV tertentu.

• Pendekatan ini mengasumsikan bahwa arus kas bersifat independen dari waktu ke waktu. Rata-rata (mean) distribusi probabilitas NPV adalah:

krf= suku bunga bebas risiko

Risiko dari proyek adalah:

Mean-standard deviation Analysis

krf =10%

Kondisi perokonomian Arus kas masuk bersih

Prob Thn 1 Thn 2 Thn 3 Thn 4

Resesi 0,25 $4.300 $4.570 $4.400 $19.716

Rata-rata 0,50 $7.302 $7.747 $7.333 $23.716

Baik 0,25 $9.812 $10.400 $10.450 $30.880

CFT $7.179 $7.616 $7.397 $24.507

Ơ $1.952 $2.065 $2.139 $4.025

NPV =$9.103

ƠNPV = $54.090

Problemperusahaan Anda memperoleh informas arus kas proyek sbb:

a. Tentukan expected NPV, dan standard deviasi NPVb. Berapa probabilitas proyek akan menghasilkan NPV=0

Thn 1 Thn 2 Thn 3

Prob Arus kas Prob Arus kas Prob Arus kas

0,1 $1.000 0,2 $1.000 0,2 $1.000

0,2 $2.000 0,3 $2.000 0,3 $2.000

0,3 $3.000 0,4 $3.000 0,4 $3.000

0,4 $4.000 0,1 $4.000 0,1 $4.000

CFT $1.967,5

ƠNPV $1.518

B. Sensitivity analysis

• Sensitivity analysis involves determinan how the distribution of possible net present values or internal rates of return for a particular project is affected by a change in one particular input variable. This is done by changing the value of one input variable while holding all other input variables constant

Example : Ekspansi proyek BQC

NPV (12%) = $6.989 IRR = 21,9%

0 1 2 3 4Bangunan & peralatan $20.000 kenaikan modal kerja 6.000CF from OperationPendapatan 40.000 40.000 40.000 40.000Biaya variable 24.000 24.000 24.000 24.000Biaya tetap 5.000 5.000 5.000 5.000Penyusutan 1.756 2.872 1.832 1.272Laba sebelum pajak $9.244 $8.128 $9.168 $9.728Pajak (40%) 3.698 3.251 3.667 3.891Laba bersih $5.545 $4.877 $5.501 5.837Arus kas operasi $7.302 $7.749 $7.333 $7.109Pengembalian MK 6,000Nilai sisa 10,607Net Cash Flow -$26.000 $7.302 $7.747 $7.333 $23.716

Keterbatasan Analisis Sentivitas

• Umumnya risiko stand-alone proyek tergantung pada faktor:a. Sensitivitas NPV terhadap variabel kuncib. Rentang nilai yang mungkin dari variabel tersebut

seperti tercermin dalam distribusi probabilitasnay

• Analisis sensitivitas hanya mempertimbangkan faktor (1), maka analisis tidak lengkap

C. Scenario Analysis• Project analysis given a particular combination of assumptions

NPV yang diharapkan = Pi (NPVi)

ơNPV =

Skenario Prob Volume penjualan Harga jual NPV (ribuan $)

Terburuk 0,25 15.000 unit $1.500 -$5.768

Base case 0,50 20.000 unit $2.000 $6.989

Terbaik 0,25 25.0000 unit $2.500 $23.390

NPV yang diharapkan $7.900

ơNPV $10.349

CVNPV 1,3

• Shao ondustries is considering a proposed project for its capital budget. The company estimayes that the project’s NPV is $12 million. This estimate assumes that the company and market conditions will average over the next few years. The company’s CFO, howerer, forecast that there is only a 50 percent chance that the economy will be average. Reconizing this uncertainty, she has also performed the following scenario analysis.

What is the project’s expected NPV, standard deviantion and coefficient of variantion.

Economic scenario Probability of outcome NPV

Recession 0,05 ($70 million)Bellow average 0,20 ($25million)Average 0,50 $12 millionAbove average 0,20 $20 millionBoom 0,05 $30 million

D. Analisis Pohon Keputusan

• Digunakan untuk mengevaluasi proyek-proyek yang memiliki beberapa titik pembuatan keputusan. Arus kas dan probabilitasnya digambarkan dalam suatu diagram pohon yang disebut dengan pohon keputusan. Kemudian probabilita gabungan dari setiap cabang dikalikan dengan NPV dari cabang tersebut dan hasilnya dijumlahkan untuk memperoleh expected NPV

= 17. 677

Ơ NPV =

= 22.020

E. Break Even Analysis

Example given the forecasted data on the next slide, determine the number of olanes that the company must produce in order to break even, on an NPV basis. The company’s cost of capital is 10%.

Break Even AnalysisYear 0 years 1-6

Investment $900....................................................................................................................................................................

...................................................................

Sales 15.5xPlans SoldVar. cost 8.5xPlanes SoldFixed Costs 175Depreciation 900/6=150Pretax Profit (7xPlanes Sold) - 325Taxes (50%) (3.5x Planes Sold) –

162.5Net Profit (3.5x Planes Sold) –

162.5Net Cash Flow – 900 (3.5x Planes Sold) –

12.5

Break Even AnalysisAnswer (Accounting)

the break even point, is the # of Planes soldwere the fixed costs and depreciation = $0.

Atau

Break even akuntasi tidak memperhitungkan opportunity cost investasi awal $900, meskipun terjadi break even sebenarnya perusahaan masih rugi secara ekonomis, Manajer keuangan bisa menghitung Break even dengan memasukan Present value aliran kas.

0 = - (3.5 x Planes Sold – 162.5)Planes Sold = 165.5/3.5 = 46.4 planes

Break even = FC + Depreciation Price/unit – variable cost/init

Break Even Analysis

• Answer (finance)the break even point, is the # of Planes sold that generates a NPV= $0

the present value annuity factor of a 6 year cash flow at 10% is 4.355 thus,

NPV = - 900 + 4.355 (3.5 x Planes Sold – 12.5)

Break Even Analysis

Answersolving for “Planes Sold”

Planes Sold = 63

0 = - 900 + 4.355 (3.5 x Planes Sold – 12.5)

Problem

• Misalkan perusahaan mencoba menganalisis ususlan investasi. Investasi awal Rp 1.000 juta, umur 5 tahun, tingkat diskonto 20%. Perhitungan aliran kas setiap tahun sbb:

Pertanyaan : tentukan Break even akuntansi, dan Present Value Break Even?

Aliran kas

Penjualan (1000 unit) Rp2.000 juta

Biaya variabel (30%) 600Juta

Biaya tetap 800 juta

Penyusutan 200 juta

Total biaya 1.600 juta

Laba sebelum pajak 400 juta

Laba setelah pajak 160 juta

Aliran kas 240 juta

Methods for incrorporationg risk into capital budgeting

1. Certainly Equaivalent2. Risk-Adjusted discount rates

Certanty Equivalent (CE)

• Memasukan risiko dalam perhitungan arus kas• Konsep CE dapat diterapkan dalam capital budgeting

dengan cara:a. Perkirakan CE dari kas setiap tahun berdasarkan arus kas

yang diharapkan pada tahun tersebut dan risikonyab. Gunakan tingkat bunga bebas risiko (rf) untuk

menghitung NPV proyek

CE = t ACFt = arus kas yang pasti

arus kas yang diharapkan

Contoh

Suatu perusahaan dengan tingkat pengembalian yang diinginkan sebesar 10%, sedang membangun sebuah fasilitas penelitian baru dengan umur 5 tahun. Pengeluaran awal proyek $120.000. arus kas masuk yang diharapkan serta koenfisien tingkat kepastian setara adalah sebagai berikut:

Hitung NPV proyek:NPV =9.500 + 18.00 + 34.00 + 60.000 + 52.000 – 120.000 (1+10)1 (1+10)2 (1+10)3 (1+10)4 (1+10)5 NPV =$19.902,5

Tahun Arus kas yang diharapkan t CE

1 $10.000 0,95 $9.500

2 20.000 0,90 18.000

3 40.000 0,85 34.000

4 80.000 0,75 60.000

5 80.000 0,65 52.000

• Norohna Inc, mempertimbangkan 2 proyek yang mutually exclusive. Nilai yang diharapkan dari arus kas proyek tersebut adalah sbb:

Jika tingkat bebas risiko setelah pajak adalah 8%, proyek mana yang dipilih?

Tahun Proyek A Proyek B t t

0 -$300.000 -$300.000 1,00 1,00

1 100.000 200.000 0,95 0,90

2 200.000 200.000 0,90 0,80

3 200.000 200.000 0,85 0,70

4 300.000 300.000 0,80 0,60

5 300.000 400.000 0,75 0,50

Risk-Adjusted discount Rates• The use of the risk-adjusted discount rate based on the concept that investor

demand higher returns for more risky projects• If the risk associated with the invesment is greater than the risk involved in a

typical endeavor, then the discount rate is adjusted upward to compenaste for this risk

• Expenssed mathematically the net present value using the risk-adjusted discount rate becomes

• NPV h ACFt - Iot=1 (1+ i*)t

WhereACFt = the annual after-tax cash flow in time periodI0 = the initial outlayi* = the risk adjusted discount raten = the project’s expected life

Contoh:Risk-Adjusted discount Rates

• Hokie corporation mempertimbangkan 2 proyek mutually exlusive. Masing-masing proyek mensyaratkan pengeluaran awal $10.000 dan akan beroperasi selama 5 tahun. Distribusi probabilitas tiap proyek untuk tahun 1 hingga tahun 5 sbb:

Oleh karena proyek B yang lebih berisiko, maka manajemen memutuskan untuk menerapkan tingkat pengembalian 15% pada evaluasinya, dan hanya 12% untuk proyek A. tentukan NPV masing-masing proyek.

NPV A =$8.024NPV B = $10.113

Proyek A Proyek B

Prob Arus kas Prob Arus kas

0,15 $4.000 0,15 $2.0000,70 $5.000 0,70 $6.0000,15 $6.000 0,15 $10.000

Risk-adjusted discount rates

• Biaya modal perusahaan secara keseluruhan adalah 15%. Perusahaan menentukan jika proyek yang dianalisis memiliki risiko yang relatif sama dengan proyek-proyek lain perusahaan pada umumnya, atau memiliki

• Risiko sama dengan rata-rata, i* = 15% (NPV=?)• Jika di atas rata-rata, premi risiko sebesar 5%, i* = 20%, NPV?• Jika di bawah rata-rata, premi risiko = - 5%. i*= 10%, NPV?

Tahun Arus kas yang diharapkan

0 (2juta)

1 1juta

2 1juta

3 1juta

4 1juta

5 1juta

Corporate risk• Risiko dalam perusahaan atau corporate risk adalah kontribusi proyek

terhadap risiko total perusahaan, atau dampak proyek terhadap variabilitas arus kas perusahaan secara keseluruhan

• Corporate risk merupakan fungsi dari deviasi standar proyek dan korelasi antara keuntungan proyek dengan keuntungan perusahaan

• Corporate risk diukur dengan

bP,F = within-firm risk atau corporate riskơp = deviasi standar keuntungan proyekơF = deviasi standar keuntungan perusahaanrPF = koefisien korelasi antara keuntungan proyek dengan keuntungan perusahaan

bP,F = (ơp/ơF).rp.F

Systematic risk atau market risk• Risiko pasar atau beta risk adalah risiko suatu proyek

dilihat dari konteks atau sudut pandang investor yang memiliki portofolio saham atau kontibusi proyek terhadap risiko portofolio

• Risiko pasar dapat diukur dengan menghitung beta pasar proyek atau project marker beta

• Beta proyek dapat dihitung dengan cara:a. meregresi keuntungan proyek dengan keuntungan portofolio

pasar (sebagai variabel bebas)b. menggunakan beta dari perusahaan lain yang memiliki bisnis

yang sama denganproyek yang dianalisis

Minicase

PT. AGA sedang mempertimbangkan pemeblian traktor yang akan menelan biaya sebesar Rp 100 juta, akan meningkatkan arus kas operasi sebelum pajak (tidak termasuk efek depresiasi) sebesar RP 40 juta setahun. Truk akan didepresiasi dengan metode garis lurus tanpa niali sisa. Pajak adalah 15%, dan biaya modal perusahaan mengenai usia traktor. Secara khusus Elizabeth meyakinkan bahwa ia tahu banyak tentang traktor yang hanya mampu bertahun 4 tahun saja. Philip setuju dengan pendapat Elizabeth, tapi ia mengatakan ada beberapa traktor yang dapat bertahan sampai 5 tahun. Laura berkata bahwa ia ada bebrapa traktor dapat bertahan samapai 8 tahun. Direktur perusahaan terpaksa menengahi perdebatan tersebut. Untuk tidak mengecewakan manajernya maka ia memutuskan untuk mempertimbangkan pendapat ke tiga manajer tersebut dengan membuat analisis scenario. Ia memberikan probabilitas 70% bahwa usia traktor 5 tahun, 20% bahwa usai traktor 4 tahun, dan 10% bahwa usia traktor 8 tahun. Apakah propoasl proyek pembelian traktor ini dapat diterima?

Cost of Capital

Cost of Capital

Objective :to get a better understanding of how a company calculates and employs the cost of capital in making invesment decisions

Cost of Capital (biaya modal)Short term debt

Cost of debt (kd)Long term debt

COCPreferred stockCommon stock

Cost of Equity (Ke)New common

stockRetained earning

Cost of Capital

• Biaya modal adalah: biaya yang harus ditanggung untuk mendapatkan modal baik yang berasal dari utang, saham, preferen, saham biasa atau laba ditahan.

• Biaya modal akan tercermin pada tingkat keuntungan yang disyaratkan oleh masing-masing pemodal

Cost of Capital (biaya modal)

Manfaat biaya modal dalam manajemen keuangan:

1. Dipakai sebagai discount rate dalam perhitungan NPV

2. Dipakai sebagai tingkat keuntungan minimal jika metode IRR digunakan untuk mengevaluasi propoasl investasi

Menghitung biaya modal

• Biaya modal harus dihitung berdasarkan suatu basis setelah pajak (after tax basis)

• Masing-masing sumber dana memiliki biaya modal yang berbeda

• Perhitungan biaya modal dilakukan secara– Individual– Keseluruhan dengan menggunakan biaya modal

rata-rata tertimbang (weighted average cost of capital)

1. Biaya Utang (Cost of Debt)Biaya utang (kd) merupakan besarnya biaya yang harus ditanggung oleh perusahaan karena menggunkan dan yang berasal dari pinjaman, yang tercermin pada tingkat keuntungan yang disyaratkan oleh pemberi pinjaman.

PN = penerimaan bersih, B= bunga, P= Nilai nominal, nn= Periode waktu

Contoh 1L

• Andaikan seorang investor bersedia membayar Rp. 900/lembar untuk suatu obligasi (surat hutang). Surat berharga tersebut memiliki nilai nominla sebesar RP 1000/lembar, dengan bunga tahunan 8%, dan jangka waktu pelunasan 10 tahun. Pajak 30%. Berpa biaya obligasi tersebut? Kd=9,6%

• Jika dikeluarkan komisi broker (flotation cost) Rp 50, maka penerimaan bersih Rp 850, berapa biaya obligasi tersebut? Kd =10,5%

• Jika obligasi terjual seharga nilai nominla kd = 8%

Contoh 2• Assume that basket Wonders (BW) has $1,000 per value zero-coupon

bonds ountstanding. BW bonds are currently trading at $385.45 with 10 years to mutually. BW tax bracket is 40%

$0 + $1,000$385.54 =

(1 + kd) 10

(1 + kd)10 = $1,000/$385.54(1 + kd) = (2.5938) (1/10)kd = 1 or 10%

2. The cost of capital for preferred stock

• Biaya modal saham preferen adalah tingkat keuntungan yang disyaratkan oleh pemegang saham preferen

• Biaya saham preferen adalah dividen saham preferen tahunan dibagi hasil penjualan saham preferen.

Dps

Kps =Pnet

Contoh

• PT damai menegluarkan 10% (deviden tahunan) saham preferen dengan nilai nominal Rp 10.000 per lembar. Biaya penerbitan dan penjualan diperkirakan 5%. Berapa biaya saham preferen?jawab: kp = 1000/9500 = 10,52%

• Perusahaan menjual saham preferen yang memberikan dividen $10 per thaun. Harga saham $100, dengan biaya flotation cost $2,5 per lembar saham. Berapa saham preferen?

use this Formula 0.1 ($100)= $113.10 - $2.0

$10 = = 0.090 =9.0% $111.10

What the cost of prefern stock?Pp =$113,10; 10% Q; Par = $100; F =$2

Dps

Kps =Pnet

3. The cost of capital for common equity

Common equity:a. Retained Earningsb. New Common Stock

Why is there a cost for retained earnings?

• Earnings can be reinvested or paid out as dividends• Investor could buy other securities, earn a return• Thus, there is an opportunity cost if earnings are

eran on alternative investments of equal risk• They could buy similar stocks its own stock and

company could repurchase its owen stock and earn Ks. So, Ks is the cost of retained earnings.

3. Biaya laba ditahan

• Biaya modal sendiri yang berasal dari laba ditahan merupakan tingkat keuntungan yang disyaratkan oleh investor modal sendiri.

Three ways to determine cost of retained earnings, ks:

1. CAPM: ks = kRF + (kM – ckRF).2. DCF : ks = D1/P0 + g3. Own-Bond-Yield-Plus-Risk

premium :ks = kd + RP.

Cost of retained earningsbased on the CAPM

• Following information is known:- KRF = 70%- MRP = 6%

ks + kRF + (kM – kRF)ks = 7% (6%) 1,2ks = 14,2%

The cost of retained earnings based on the DCF-method

• Use the DCF formula, when the following information is known- Do =$4.19- Po =$50- g=5%.

The cost of retained earnings based on the DCF-method

Ks = D1 + g = Do (1+g) + g

Po Po

= $4.19(1.05) + 0.05

$50

=0.088 + 0.05

= 13.8%

Find Ksusing the own-bond-yield-plus-risk-premimum method(Kd=10%, RP = 4%)

ks = kd + RP

ks = 10.0% + 4.0 = 14.0%

What’s a reasonable final estimate of Ks

Method EstimateCAMP 14.2%DCF 13.8%Kd + RP 14.0%Average 14.0%

4. Biaya modal saham biasa baru• Biaya modal saham biasa baru lebih tinggi dibandingkan biaya modal laba

ditahan, hal ini dikarenakan adanya biaya penerbitan saham baru (flotation cost)

Ke = D1 + g Po - F

Keterangan:Po =Harga saham biasa saat iniD1 =Dividen yang diharapakan tahun mendatangKe = Tingkat keuntungna yang disyaratkan oleh pemodal saham biasag =Tingkat pertumbuhan dividenF =Biaya penerbitan saham

The cost of capital for new common stock

• Use the DCF formula, when the following information is known:– Do = $4.19– Po = $50– g = 5%– Flotation costs = 15%

• Remember, flotation reduce the revenus for the issuing firm, thus lower Po .

New common stock, F = 15%

ke = Do(1 + g) + g Po (1 – F)

= $4.19(1.05) + 5.0% $50(1 – 0.15)

= $4.40 + 5.0% = 15.4% $42.50

Flotation adjustment:ke – ks = 15.4% - 13.8% = 1.6%

Add the 1.6% flotation adjustment to average ks = 14% to find average ke

Ke = ks + flotation adjustment

Ke = 14% + 1.6% = 15.6%

Calculating the WACC

• Calculating the WACC, when a company finances with 30% debt, 10% preferred stock and 60% common equity

• The formula for the WACC isWACC = wd kd (1 – T) + wps kps + wceKs

• First use only the retained earnings component of common equity (wce)

What’s WACC using only retained earnings for equity component of WACC1

WACC = wdkd (1 –T) + wpskps + wceks)

= 0.3 (10%)(0.6) + 0.1(9%) = 0.6)14%)= 1.8% + 0.9% + 8.4% = 11.1%= cost per $1 financed until retained

earnings used up

• The capital structure for the bias corporation follows. The company plans to maintain its debt structure in the future. If the firm has a 6 percent after tax cost of debt, a 13.5 percent cost of preferered stock, and a 19 percent cost of common stock. What is the firm’s weighted cost of capital?

Capital structure ($000)Bond $1,100Preferred stock 250

Common stock 3,700

$5,050

Bias Corporation – weighted cost of capital

Capital structure

Weights Individual cost

Weighted cost

Bond $1,100 0,2178 6% 1,31%

Preferred stock $250 0,0495 13,5% 0,67%

Common stock $3,700 0,7327 19,0% 13,92%

$5,050 15,9%

Problem

• Target struktur modal perusahaan adalah 30% hutang, 10% saham preferen, dan 60% modal sendiri (yang seluruhnya berasal dari laba ditahan). Biaya hutang 12%, biaya saham preferen 12,6%, dan biaya laba ditahan 16,5%. Pajak 40%. Tentukan WACC?

• Struktur modal untuk perusahaan “Crayon” adalah sbb. Perusahaan berencana untuk mempertahankan struktur utangnya di amsa mendatang. Jika perusahaan memiliki 5,5% biaya utang setelah pajak, 13,5% biaya saham preferen, dan 18% biaya saham biasa. Tentukan WACC?

Obligasi $1.083.000Saham preferen 268.000

Saham biasa 3.681.000

Total 5.032.000

Marginal cost of capital• MCC merupakan biaya untuk memperoleh rupiah tambahan

sebagai modal baru.• Membuat skedul MCC membutuhkan informasi mengenai

– Biaya modal (WACC) dari penggunaan alternatif modal sendiri, laba ditahan dan sahaam biasa baru.

– Titik peningkatan MCC (break point): merupakan titik meningkatnya WACC perusahaan karena semua laba ditahan telah digunakan dalam pendanaan.

Break point = laba ditahan proporsi modal sendiri

Contoh:

• Suatu perusahaan membutuhkan modal baru sebanyak 500 juta. Struktur modal yang hendak dicapai adalah 30% hutang, 10% dari saham preferen dan 60% dari modal sendiri berupa laba ditahan atau saham biasa baru. Biaya 12,6%; 16% dan 16,8%. Perusahaan berharap dapat menahan laba Rp 100 juta. Buatlah skedul MCC untuk modal baru ini.

Contoh :

• WACC jika menggunkan laba ditahan = 0,3x8,4% + 0,1x12,6% + 0,6x16% = 13,38%

• WACC jika menggunakan saham biasa baru= 0,3x8,4% + 0,1x12,6% + 0,6x16,8% = 13,86%

• Break point= 100 juta/0,6 + 166,67 juta

pada saat dana baru yang digunakan mencapai Rp 166,67 juta, maka perusahaan telah menggunakan seluruh laba ditahan. Setelah jumlah ini, maka perusahaan harus menerbitkan saham biasa.

Skedul MCCWACC

WACC=13,86 MCC WACC=13,38

Modal baru 166,67 juta

Skedul MCC dengan depresiasi• Melanjutkan soal sebelumnya, misalkan diketahui bahwa perusahaan memiliki

dana dari depresiasi sebesar 50 juta. Sekdul MCC akan menjadi

WACC= 13,86%MCC WACC= 13,38

216,67 juta50 juta

A B

A. Adalah titik dimana seluruh dana depresiasi telah dipakai habisB. Adalah titik dimana seluruh laba ditahan telah dipakai habis

Investment Opportunities Schedule/IOS

• IOS adalah suatu grafiuk yang menggambarkan proyek-proyek yang potensial dalam suatu urutan berdasarkan ranking IRR proyek tersebutContoh:

• Misalkan PT.XX memiliki beberapa kesempatan investasi yang terbaik (pengembalian tertinggi) sapai yang terburuk (pengembalian terendah) seperti table berikut:

• Proyek manakah yang dipilih

SKEDUL KESEMPATAN INVESTASIKesempatan

InvestasiTingkat

PengembalianInternal (IRR)

Investasi Awal

Investasi Kumulatif

A 15,0% 100.000 100.000

B 14,5% 200.000 300.000

C 14,0% 300.000 600.000

D 13,0% 200.000 800.000

E 12,0% 200.000 1.000.000

F 11,5% 200.000 1.200.000

G 10,0% 100.000 1.300.000

SKEDUL KESEMPATAN INVESTASI

IRR15% IRR14% A IRR13 B IRR12 C IRR 12,1% MCC11 D IRR10 E F IRR IOS

G0 100.000 600.000 1.000.000

Proyek yang layak dipilih adalah proyek: A, B, C, D, E karena IRR > MCC proyek.

Soal

PT Sentosa sedang menyusun anggaran untuk tahun mendatang. PT sentosa memperkirakan laba bersih Rp 75juta, dan dividen payout ratio (DPR) adalah 40%. Dana dari deprisiasi diperkirakan Rp 30 juta. Penghasilan dan dividen perusahaan diperkirakan tumbuh secara konstan sebesar 5%/tahun. Dividen saat ini adalah Rp 90, dan harga pasar saham saat ini Rp 859. bunga kredit baru dari bank adalah 14%. Biaya emisi saham baru 20%. Struktur modal yang optimal adalah 60% modal senidri dan 40% hutang. Pajak 40% PT Sentosa memiliki kesempatan investasi proyek yang bersifat independen, sbb:

Buatlah anggaran modal yang optimal

Proyek Biaya IRR

A 150 JUTA 17%

B 200 JUTA 14%

C 150 JUTA 16%

D 120 JUTA 15%

JAWABLaba ditahan = 75 juta-40% (75juta)= 45jutaBiaya laba ditahan : ks = D1/Po + g

= 90(1+0,05) +0,05 =18,75%859

Biasa saham biasa baru = 90 (1 + 0,05) + 0,05 = 18,75%859 (1-0,2)

WACC1 = 12,96%WACC2 = 14,61% (jika menggunakan saham biasa baru)Breka point = 45/0,6 = 75 jutaKarena ada depresiasi 30 juta, maka break point = 105 juta

% IRR

17% A IRR

C IRR 14,61% MCCIRR12,96% D IOS B

100105 150 200 300 400 500 600

Proyek A, C dan D diterima. Anggaran modal optimal= 420 juta

SOAL

1. PT ABC ingin melakukan ekspansi dalam situasi yang cukup sulit seperti sekarang ini. Dari perhitungan biaya modal rata-rata diketahui bahwa semakin tinggi kebutuhan dana, maka akan meningkatkan cost of capital. Sumber dana berasal dari modal sendiri sebesar 40%, pinjaman bank 35% dan 25% berasal dari penerbitan obligasi. Berikut ini adalah table cost of capital untuk masing-masing interval kebutuhan dana.

Cost of capitalInterval kebutuhan dan (miliyar RP) Cost of capital

0-20 13,0%

20-45 13,5%

45-75 15,0%

75-110 16,5%

110-160 17,5%

>160 18,5

Setelah dilakukan studi kelayakan, diperoleh informasi bahwa tingkat keuntungan dari 6 proyek tersebut adalah:

Proyek manakah yang layak dilaksanakan? Dan berapa anggaran modal yang optimal?

Proyek IRR Investasi awal (miliyar RP)

Pengalengan sayur 15,5 20

Palm oil 13,5 50

Rumah makan 19,0 15

Hotel 16,5 30

Pabrik sepatu 14,0 35

Bisnis eceran 18,0 20

2. PT “Angkasa” memiliki struktur modal sbb:

Perusahaan mengharapkan kenutungan bersih 16.000.000, -tahun ini. DPR 25%, pajak 40%, dan investor mengharapkan pendapatan dan individen tumbuh 9% dimasa mendatang. Tahun lalu perusahaan membayar dividen 3.600,-(Do=3600), dan saat ini harga saham 60.000,- per lembar. Suku bunga bebas risiko adalah 11%, dan suatu saham rata-rata memberikan rate of return yang diharapkan sebesr 14%. Beta saham PT Angkasa adalah 1,5. saham baru memiliki flotation cost 10%Saham preferen dapat dijual ke publik dengan harga 100.000,- per lembar, dengan dividen 11.000,-. Flotation cost 5.000,- per lembar.Hutang dapat dijual dengan membayar bunga sebesar 12%

Hutang 25%

Saham preferen 15%

Saham biasa 60%

Total 100%

Pertanyaan 1. Hitung biaya modal dari: hutang, saham preferen, laba

ditahn, dan saham biasa baru2. Tentukan Retained Earning Break Point3. Tentukan WACC dengan menggunakan laba ditahan, dan

WACC dengan menggunakan saham biasa baru.4. Gambarkan skedul MCC5. Misalkan PT Angkasa meramalkan bahwa biaya depresiasi

untuk periode yang direncanakan adalah 10.000.000,-. Bagaimana ini mempengaruhi skedul MCC?