Financial feasibility analysis of cost and traffic volume: Case study on toll road investment project
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Abstract
This research was conducted to analyze the impact of construction costs and traffic volume as the main parameters to the feasibility of an investment project with a case study on part of the road of the Sumatran toll road network, located on the Island of Sumatera, which is one of the largest islands in Indonesia. Financial analysis uses indicators of Net Present Value (NPV), Internal rate of return (IRR) and Benefit Cost Ratio (BCR). Investment costs are based on current actual conditions, while revenue is derived from the realization of traffic volume crossing the toll roads. The results of the analysis show that due to the high increase in investment costs accompanied by a decrease in income due to the large difference in traffic volume projections, the project that was originally feasible change to financially not feasible. Therefore, further efforts possible are needed to make the investment feasible. The results show that the required increasing toll tariffs is 1.996 times higher than the initial one, while the extension of the concession does not show any improvement in financial feasibility. Therefore, a proposal is needed so that the tariff is according to the ability and ability of road users while maximizing the potential for non-tariff income.
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