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The problem says that: The level of working capital investment at the start of each year is expected to be 10% of the sales revenue in that year
This in the workings:
year 1 2 3 4
Inflated sales revenue ($000) 1,308.75 2,817.26 7,907.87 5,443.58
Working capital ($000) 130.88 281.73 790.79 544.36
Incremental ($000) (130.88) (150.86) (509.06) 246.43and the final answer is in npv table is:
Working capital (150.86) (509.06) 246.43 544.36I don’t understand why it is not the same with the incremental line? If you add all working capital for all years should not be zero, nill?
I hope i expressed clear. Please help. In december will be my third try.It is really difficult for me to answer, because I do not have the Kaplan Kit (only the BPP Kit) and so I cannot look at the whole question.
Certainly the incremental working capital figures you have written are correct, and I assume you are OK with them.
With regard to what you refer to as “the final answer in the NPV table”, it makes no sense given the rest of what you have written.
Thank you! I was so unsecured on my own knowledge that i could not believe that the answer was wrong at the end.
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