In October 2023 PT.DoReMi made a work plan for 2024. One of the things that management
flat company is the profit budget in 2024 - 2026.
From various existing data, a profit budget for 2024 is prepared as follows:
Sales 7,000,000,000
BPP 4,100,000,000
Gross Profit 2,900,000,000
Operational Expenses:
 Salary 720,000,000
 Electricity & Telephone Expenses 360,000,000
 Office Rent Expenses 360,000,000
 Transportation Expenses 180,000,000
 Total Operational Expenses 1,620,000,000
Operating Profit 1,280,000,000
The profit budget is prepared with the assumption that there is no bank debt or bonds.

For 2025, it is estimated that the amount of income and expenses (except interest expenses) will increase by 20% compared
in 2024. For 2026, it is estimated that total income and expenses (except interest expenses) will increase by 20%
compared to 2025.
To support its operations the company plans to borrow funds from banks and issue bonds. There are several
bank that offers loans to PT. DoReMi. There are also several creditors who have offered to buy
bonds to be issued by PT. DoReMi.
PT. DoReMi plans to issue 5 year bonds with an interest rate of 20%. PT.DoReMi will also
apply for a loan from the bank of IDR 3 billion.
Bim Bank offers a loan of IDR 3 billion with an interest rate of 15% for 2024. Meanwhile, the
interest for the following year uses a floating interest rate, according to the prevailing interest rate. Estimated
the interest rate in 2025 will be 20% and in 2026 it will be 24%.
Sum Bank offers a loan of US $ 187,500 with an interest rate of 10% for 2024. Meanwhile
The interest rate for the following year uses a floating interest rate, according to the prevailing interest rate.
It is estimated that the interest rate in 2025 will be 12% and in 2026 it will be 20%. Rupiah exchange rate against the dollar
estimated at IDR 16,000 at the beginning of 2024 and IDR 16,500 at the end of 2024 and IDR 17,000 at
end of 2024 and 17,500 at the end of 2025 and 18,000 at the end of 2026
Big Bank offers a loan of US $ 187,500 with an interest rate of 10% for 2024. Meanwhile
The interest rate for the following year uses a floating interest rate, according to the prevailing interest rate.
It is estimated that the interest rate in 2025 will be 15% and in 2026 it will be 20%. Rupiah exchange rate against the dollar
estimated at IDR 16,000 in early 2024 and IDR 16,500 in early 2024 and IDR 17,000 in
end of 2024 and amounting to 17,500 at the end of 2025 and amounting to 18,000 at the end of 2026. Companies can
hedge at an exchange rate of IDR 16,700 per dollar, which means hedging costs are required
amounting to IDR 131,250,000 per year.
In order to manage the company's financial risks - which one should company management choose from three alternatives?
financial financing? Why ?

Answer rating: 100% (QA)

To make an informed decision on financial financing lets compare the three alternatives available to PT DoReMi borrowing from Bim Bank Sum Bank or Big ... View the full answer