Working capital calculation method conflict for Yilandwe (Jun 13) and Tramont (P

On Yilandwe; I also dont understand how they calculated the $120 Contribution (part sales) in the question it says $40.The only way am getting the $120 is when i Calculate as follows:$280 - $200=$80 Then I add the $80 + $40 hich gives me $120 does it mean the incremenatal $80 Should be considered as extra contribution? I dont undertsnad the logic at all.Please assist. Thanks

The working capital needed at time 0 is 9,600 as per the question. The first years inflation rate is 22%, and so they then need an extra 22% x 9,600 = 2,112. So they now have working capital of 9,600 + 2,112 = 11,712 The second years inflation rate is 14.7%, so they then need an extra 14.7% x 11,712 = 1,722 So they now have working capital of 11,712 + 1,722 = 13,434 The this years inflation rate is 9.8%, so they then need an extra 9.8% x 13,434 = 1,316

Imoni is currently charging $200 per unit and earns a contribution of $40, which means that the units are costing them $160. In future they will be charging $280 per unit, and so the contribution in future will be $280 - $160 = $120.

Perfect;thank you so much;i understand now.Much appreciated.

You are welcome :-)