Investment Decision Analysis on Buying or Renting Watering Tankers for Landscape Operations

This study analyzes whether buying or renting watering tankers is more financially advantageous for PT SIPP, a landscape maintenance company in Indonesia planning to expand operations by procuring five additional units, and evaluates whether this decision remains robust under fluctuating cost conditions. Primary data were collected through discussions with the company's director and finance manager, supplemented by secondary data from internal financial and operational reports covering January 2023 to December 2024. The analysis applies capital budgeting techniques, specifically Net Present Value (NPV) of cash outflows, discounted using a Weighted Average Cost of Capital (WACC) of 11.58% for the buying alternative and a cost of equity of 14.10% for the renting alternative, derived from the company's 60:40 equity-debt financing structure, alongside a sensitivity analysis applying simultaneous cost variations of -20% to +20% to maintenance, fuel, labor, and rental components over a 10-year period. The results show that the buying alternative produces an NPV of cash outflow of Rp2,714,126,620, compared to Rp3,066,236,654 for the renting alternative, a cost saving of Rp352,110,035, or approximately 11.48%, favoring purchase. This advantage holds only when tanker utilization exceeds an 88.52% break-even rate. The sensitivity analysis confirms the buying decision remains consistent across all scenarios, showing a smaller percentage change in NPV than the renting alternative and thus greater resilience to cost fluctuations. The buying alternative is therefore recommended for PT SIPP, offering both lower long-term costs and stronger robustness against cost changes, and providing a structured, quantitative basis for the company's fleet procurement decision.