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Sir,
Please help me in arriving figures for Working Capital in npv calculation.( foreign direct invstmnt) and loss exports figures and can u expln y we doing loss exportsThe working capital at time 0 is 35 (per the question).
Because of inflation in Hotternia, it will need to be increased by 10% in the first year, so an extra 3.5 (rounded to 4). The total is now 39.
In the second year it will need increased by inflation of 8%, so an extra 8% x 39 = 3.1 (rounded to 3). So the total is now 42.
In the third year it will need to be increased by inflation of 8%, so an extra 8% x 42 = 3.36 (rounded to 3). And so on.
Three lines above ‘required’ in the question, it says that they expect there exports to fall by 500,000 units a year, and so this is a cost of doing the investment.
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