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4th TUTORIAL OF ENTERPRISE DESIGN & ANALYSIS, SEKAR ARUM SARI …
4th TUTORIAL OF ENTERPRISE DESIGN & ANALYSIS
TYPES OF PROJECT
FINANCING FUNDS
Fixed costs, variable costs and semi variable costs
(Maflahah, 2010)
Costs of pre-investment activities
Costs for land acquisition
The cost of buildings and equipment
Machinery and equipment costs
The cost of vehicles and material handling
Fixed capital procurement costs and technology procurement
Experimental production costs
loan interest costs during the period of project development unexpected costs.
Fixed Capital Funds
(Maflahah, 2010)
Inventory costs
Accounts receivable
Cash
CAPITAL STRUCTURE
Total Project Cost
Fixed Cost
Pre-Investment
Land
Buildings and Equipment
Machine and tools
Vehicle and material handling
Fixed Capital Procurement
Technology Procurement
Production Trial
Loan interest
Unforeseen expenses
Net Working Capital
Source of Payment
Owner Equity
Loan
Short term credit, Government Bank
Long term credit, Government Bank
Long term credit, Foreign financial institution
COST ESTIMATES
Life cycle costs consist of:
Initial cost: the cost required to obtain an item and will not recur during its lifetime (initial investment).
Example: machine prices, training costs, transportation and installation costs and additional costs for tools.
Operational and maintenance costs: repetitive costs needed to operate and maintain items during their lifetime.
Consists of direct labor costs, direct material
costs and overhead costs.
Disposal fees: costs required for the removal or destruction of an item. Usually at the end of the cycle, an item still has a sale value.
The life cycle costs above can be classified into:
Upcoming Costs and Future Cost
Direct Costs, Indirect Costs and Overhead
Fixed costs, variable costs and semi variable costs
SENSITIVITY ANALYSIS
Sensitivity analysis is intended to determine how sensitive a decision is to changes in the parameters that influence it.
Sensitivity analysis is done by changing the value of a parameter at a time to see how it affects the feasibility of an alternative investment.
Parameters that usually change and changes can affect decisions:
sales volume
selling price
initial investment
economic life
residual value
operational costs and maintenance
BREAK EVENT POINT
BEP analysis can be used to:
Determine the value of MARR where two alternative projects are equally good
Determine the level of production where two or more alternatives are equally good
Do analysis to buy
Determine the length of the period (or the number of units that must be produced) so that the total income equals the total expenditure
Break-even point is obtained if
AC (annual cost) = AR (annual revenue).
The BEP concept can also be used to determine eligibility above the minimum target.
SEKAR ARUM SARI
19522362