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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Practice Answer Q1
Dear Sir I am facing a problem in solving the first question ”Anvil”. I am not understanding the point that how you have been reached to the figure of 363 from 275 as working capital 10% increase p.a. Though i understand to reach the fig 275 in year 1. But for year 2 and year 3 it seems a bit odd to me. I am not getting the exact figure of 363 for year 2 by adding 10% to 275 of year 1 and also fig of 466 for year 3. Please can you explain it. it will be very kind of you thanks.
In the question, the total investment in working capital at time 2 is 300. If you add 10% to it for 2 years then you get 363.
Similarly, the total in the question at time 3 is 350. If you add three years inflation at 10% then you get 466.