Capital Budgeting Analysis on Decision Making For the Establishment of a New Sheep Livestock Business in the Jember Regency

Abstract

The livestock sector encourages the growth of a populist economy to increase the income and welfare of the community, especially the livestock community. The sheep farming business is in great demand by investors, but so far, no investment assessment analysis has been carried out on the project's feasibility. This study aims to assess whether the project to establish a new sheep farming business in Jember Regency is feasible. This study uses 6 investment assessment criteria, namely Payback Period (PP), discounted payback period (DPP), Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI). Based on the investment assessment criteria, the payback period and discounted payback period are 6.17 years and 9.40 years or under the investment age (10 years). The NPV value is Rp. 217,369,579.67 or more than zero. The IRR and MIRR values are 12.58% and 11.10% or above the 9% interest rate. Meanwhile, the Profitability Index value is also greater than 1 or 1.38. So based on the six investment evaluation criteria that have been carried out, it can be said that establishing a new sheep farming business in Jember Regency is feasible