the question states -working capital will be increased annually at the start of years 2 to 4 by the inflation
Then y do we calculate the increase in working for year 1 and deduct it
Q no 13 in BBp
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Working capital
4y ago#1The working capital at time 0 is 1,025 (which is the start of the first year).
At the start of the second year (i.e. time 1) they need to increase it by 4%. So they need an extra 4% x 1,025 = 41 at time 1. They then have 1,025 + 41 = 1,066 working capital.
At the start of the third year (i.e. time 2) they need to increase it by 5%. So they need an extra 5% x 1,066 = 53,. They now have 1,066 + 53 = 1,119 working capital.
and so on :-)
thank you
is it only for working capital or is it the same to other cfs also
when they say from first year
4y ago#3Only working capital because of the nature of working capital (as was the case in paper FM also).
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