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
(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.