Track: Engineering Economy

Abstract

A lithium battery is a very lightweight battery but has better storage capacity and longer endurance than conventional batteries. Developing lithium batteries for motorcycles requires a business feasibility analysis to replace a motorcycle with lithium batteries. This article is an improvement from Kurniyati et al. (2016), which discusses the feasibility of investing in the lithium battery business for motorcycles. Previous articles have not considered taxes and interest rates inflation. Therefore, improvements are needed to produce a better outcome. In this article, a feasibility analysis of investing in the lithium battery business using the NPV (Net Present Value), PP (Payback Period), IRR (Internal Rate of Return) method with a MARR value of 7.5% and a time horizon of 8 years. In addition, this article also considers the tax rate and interest rate inflation. Based on the calculations, the NPV value > 0 is IDR 198,366,208.00, the PP value is 14 years, four months longer than the eight-year time horizon, and the IRR < MARR is 12%. Therefore, investment in the lithium battery business for motorcycles is not feasible and contradicts the research of Kurniyati et al. (2016), which has not considered income tax and inflation interest rates. Then, all values can meet the feasibility test aspect when the initial selling price increases by 5%.