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Hi,
Can you please explain how to get the “4,9 & 5”?
The formula given in the answer for calculating the increase in the contribution to sales ratio (%) is as follow :-(4 x X x 0.893)+(9 x X x 0.797)+(5 x X x 0.712) = 0.426932
Thanks very much!
Everything in this line is in $ millions:
(4 x X x 0·893) + (9 x X x 0·797) + (5 x X x 0·712) = 0·426932
2009 sales are 80,000 x 50 = 4 million (hence the 4)
2010 sales are 180,000 x 50 = 9 million (hence the 9)
2011 sales are 100,000 x 50 = 5 million hence the 5)The increase in c/s ratio, X, must be enough to eliminate the current negative NPV of 426932.
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