Research Article
Financial Feasibility Analysis of Borrow-to-Use Permit of Forest Area to Maximize Coal Reserve in PT. XYZ
@INPROCEEDINGS{10.4108/eai.25-11-2021.2318820, author={Febrian Maramis and Ahmad Danu Prasetyo}, title={Financial Feasibility Analysis of Borrow-to-Use Permit of Forest Area to Maximize Coal Reserve in PT. XYZ}, proceedings={Proceedings of the 1st International Conference on Social, Science, and Technology, ICSST 2021, 25 November 2021, Tangerang, Indonesia}, publisher={EAI}, proceedings_a={ICSST}, year={2022}, month={7}, keywords={capital budgeting; borrow-to-use permit; risk analysis}, doi={10.4108/eai.25-11-2021.2318820} }- Febrian Maramis
Ahmad Danu Prasetyo
Year: 2022
Financial Feasibility Analysis of Borrow-to-Use Permit of Forest Area to Maximize Coal Reserve in PT. XYZ
ICSST
EAI
DOI: 10.4108/eai.25-11-2021.2318820
Abstract
PT. XYZ is a coal mining company located in East Kalimantan. The challenges and uncertainty of the future business pushed the company to develop strategies to increase the profit received. One opportunity is to propose a Borrow-to-Use Permit (PPKH) in an area that overlaps between PT. XYZ Coal Contract of Work (CCOW) and Production Forest to maximize the company's coal reserves. Before applying for the permit, the company must determine the feasibility of the project, as several payments required for the permit will increase the company's operating costs. The purpose of this paper is to analyze the financial feasibility of this project using the capital budgeting method, as well as to assess the risk associated with the project via sensitivity analysis and Monte Carlo simulation. The outcome of this study shows that the project is financially feasible to be executed with incremental cashflow‘s NPV greater than 0 which is US$ 76.764.736, and the risk analysis shows that the project will have a 69.6% probability of giving more value to the company, it still meets the level of acceptance set by PT. XYZ.