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Assessing Financial Feasibility of Joint Venture Creation For Stevia Production

Felicia Luz Clarita Ina Tukan, Mandra Lazuardi Kitri

Abstract


Abstract. The healthy food and behaviour trends have mushroomed in recent years, along with the increase in diabetes patients in Indonesia. PT Mitra Kerinci, a private company in the agricultural sector, see a significant opportunity to produce dried stevia leaves. However, the lack of knowledge, technology advancement and experience of stevia plantation has driven the management consideration to perform under a joint venture of PT XYZ. The research conducts the financial feasibility of PT XYZ to determine the ability of the project in financial aspect. The research will construct pro forma statement and determine capital budgeting cash flow with four techniques that consider the time value of money. The project is considered financially feasible with Net Present Value of IDR 104,531,609,271, the internal rate of return of 18.07%, the project’s discounted payback period expected to occur in 5 years 7 months 3 days and profitability index of 2.06. Moreover, the study also involved the risk assessment using the Sensitivity Analysis and Monte Carlo Simulation that shows there are five sensitive variables in the production process will be faced by the firm. Notwithstanding, there is 7.74% probability of generating the negative return, the project still meets the level of acceptance set by PT Mitra Kerinci.

Keywords: Agricultural Sector; Dried Stevia Leaves; Financial Feasibility; Joint Venture; Capital Budgeting

 


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