Currently I am living in suburb of Jakarta called Sawangan located about 25 km from my Office in South Jakarta. I have two options, whether I will extend the contract for next one year or rent an apartment with monthly payment in Central Jakarta close to office, where I can walk directly to office by walking. In order me able to decide whether to extend the current contract or rent a apartment in central Jakarta, I would like to make an exercise which options is more beneficial in term of cost of living.
DEVELOPMENT OF FEASIBLE ALTERNATIVES
In order to decide where you living, there are some variables that needs to be considered, i.e. rent cost, transportation, working transport duration, fuel consumption. To decide which options that I will choose is based on the cheapest in term of Net Present Value.
DEVELOPMENT OF OUTCOMES FOR EACH ALTERNATIVE
In order to be able to see the total cost of each option, below is the cost calculation by using MsExcel. Major consideration is the rental cost of apartment (option2), trips duration (option1), hourly cost (option1), monthly interest rate (option 1&2), fuel consumption (option1). Safety factor and other aspects that are not considered below is assumed to be equal impact to Option 1 & Option 2.
SELECTION OF CRITERIA
Below is the spending calculation on monthly basis of those two options (option-1. Continue existing house rental or option-2. Rental new apartment in Jakarta).
Table 1. General Term that applied in Option 1 and option 2
Table 2. Option-1, continue current house contract.
Table 3. Option-1, Spending Plan
Table 4. Option-2, Rent new apartment in Jakarta.
Table 5. Option-2, Spending Plan
ANALYSIS FOR THE ALTERNATIVES
In order to be able to choose the best alternatives, there are two majors consideration i.e. total expend and Net Present Value.
SELECTION ON THE PREFERRED ALTERNATIVES
Based on above calculation, it is showed that total cost based on spending plan is equal IDR 88,086,698, but the total value of NPV option-1 equal to 83,549,729 and option-2 equal to 82,797,577. Based on above comparison the preferable is option-2 (NPV is less).
PERFORMANCE MONITORING AND POST EVALUATION RESULT
In order to be able to maintain the alternatives to option-2, we have to make sure that price fluctuation is zero. Once, the price fluctuation greater than 0, we have to re-calculate the options.
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