A company called PT ABC is considering investing in a new project. The following is the available

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Question:

A company called PT ABC is considering investing in a new project. The following is the available information regarding the project:
Initial investment: IDR 2,000,000,000
Net cash flow per year:
Year 1: IDR 800,000,000
Year 2: IDR 900,000,000
Year 3: IDR 1,000,000,000
Cost of capital: 15%

Question:
a. Calculate the Internal Rate of Return (IRR) for the project.
b. Based on the Accept-Reject approach, should the company accept or reject this project?

Cloudy, the Finance Director of Cloud Corporation, is considering two alternatives to replace the machines in his company. Following is the information provided:
Alternative 1: Renew the existing machine
Machine upgrade cost: $20,000
Annual operating costs: $10,000
Economical life: 5 years
Residual value at the end of 5 years: $3,000

Alternative 2: Replace the machine with a new machine
New machine price: $40,000
Annual operating costs: $8,000
Economical life: 5 years
Residual value at the end of 5 years: $7,000
Companies are subject to a tax rate of 40%. Assume a straight-line depreciation method.

Question:
a. Calculate the annual depreciation expense for each alternative.
b. Calculate the total operating costs (including depreciation) for 5 years for each alternative.
c. Based on a comparison of total operating costs, which alternative seems better? Why?

PT XYZ is a manufacturing company that produces electronic devices. The following is information about the company:
Fixed operational costs: IDR 150,000,000 per month
Selling price per product unit: IDR 1,250,000
Variable operational costs per unit: IDR 500,000
Fixed finance costs (loan interest): IDR 50,000,000 per month
Number of preferred shares: 20,000 shares with dividends of IDR 20,000 per share per month
Number of ordinary shares: 200,000 shares

Question:
a. What level of sales (number of units) is required to achieve operational BEP?
b. Calculate the degree of operating leverage (DOL) if the company succeeds in selling 10,000 units of product. How would a 10% change in sales affect a company's EBIT?
c. What level of sales (number of units) is required to achieve financial BEP (EBIT sufficient to pay loan interest and preferred stock dividends)?
d. Calculate the degree of financial leverage (DFL) if the company succeeds in selling 15,000 units of product. How does a 10% change in EBIT affect earnings per share (EPS)?
e. Analyze the relationship between operational leverage and financial leverage in the company PT XYZ, and explain how both affect the risks and returns for ordinary shareholders.

PT ABC is a manufacturing company that produces household appliances. Currently, the company is evaluating the optimal capital structure. The following is information about the company:
Current EBIT: IDR 1,200,000,000
Number of shares outstanding: 500,000 shares
Cost of debt (rd): 8%
Corporate tax rate (T): 25%
The company is considering three capital structure alternatives:
100% equity
50% equity, 50% debt (Debt: IDR 600,000,000)
30% equity, 70% debt (Debt: IDR 1,400,000,000)
a. Calculate EPS for the three capital structure alternatives considered using the EBIT-EPS approach.
b. Determine which capital structure produces the highest EPS, and explain why that capital structure is considered optimal in the context of the EBIT-EPS approach.