DOI: 10.36347/sjebm.2018.v05i03.017

Pages: 270-279

This research aims to determine rubber plants life in rubber plantation using capital budgeting analysis. The analysis was based on data indicated in the company's management report in 2007 to 2016. The estimation of cash flows for the capital budgeting analysis (i.e. NPV analysis) was based on the Monte Carlo’s simulation. The discount rate in the analysis was based on cost of equity and cost of debt. The results of NPVs simulation has demonstrated that the rejuvenation time of rubber plant depends on the source of fund in the rubber plantation investment. Considering the variability of the components of NPVs analysis, which were simulated using Monte Carlo method, the rejuvenation time of rubber plant is correlated negatively with the cost of capital or discount rate being used in NPVs analysis.