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15.00%
Product Price
Raw Material Cost
10.00%
Distribution Cost
5.00%
0.00%
-20% -10%
0%
10%
20%
Deviation
From the chart above that greatly affects the IRR is the
product price. It can be seen that the increase in the value of the
product price causes a very significant increase in the IRR. And if
raw materials and distribution cost will lead to increased salary
decreases IRR. Our plant is not profitable when the IRR is lower
than MARR which is 13.3%. Thats why we can not decrease our
selling price to $2800/ ton.
7.6
7.4
7.2
7
Payback Period
6.8
Product Price
Raw Material Cost
6.6
Distribution Cost
6.4
6.2
6
-20% -10%
0%
10%
20%
Deviation
Rp800,000,000,000
Rp600,000,000,000
Rp400,000,000,000
Rp200,000,000,000
Rp-
NPV
Rp(200,000,000,000)
Rp(400,000,000,000)
Product Price
Raw Material Cost
Distribution Cost
Rp(600,000,000,000)
Rp(800,000,000,000)
-20%-10% 0% 10% 20%
Deviation
value a lot decreasing until it has negative value. It also effecting the payback
period of the cash flow, actually it is affecting the cash flow of the company until
we didnt have profit until the end of our effective production year. So the result
is, the variable that effecting NPV or the NPV most sensitive of is selling price.
We conculde that the most sensitive variable or our production is selling
price and raw material cost. Selling price is very sensitive, if you decrease the
selling price 5% lower. It will make the plant will not have a big profit for 20
years. That is why, we have some strategy. If selling price decrease we can
decrease a production capacity because need a raw material and utility can
decrease too.