Exploration of the Cost of Capital Determination Process in Housing Project Financing at PT. Damai Putra Group Yogyakarta

Abstract

This study aims to explore the process of determining the cost of capital in housing project financing at PT Damai Putra Group Yogyakarta. The background of this research is based on the fact that, in practice, the determination of the cost of capital does not always rely on standardized theoretical approaches, but is instead influenced by internal company policies, managerial considerations, and project risks. This study is grounded in the theories of capital structure, pecking order theory, and the behavioral risk perspective in financial decision-making. The research employs a qualitative approach, with data collected through in-depth interviews, and the informants consist of management personnel involved in the housing project financing process. The findings indicate that the company prioritizes internal financing sources, including owner’s capital, company profits, and cash flow turnover, driven by considerations of financial stability, avoidance of interest-related risks, and the need to maintain corporate flexibility. The financing decision-making process involves internal management and is based on the evaluation of project risks, the company’s cash condition, and previous project experience. The study reveals that, in practice, the determination of the cost of capital tends to be more managerial and experience-based rather than relying on purely theoretical and mathematical approaches.