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working capital problem 27 exam kit kaplan

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › working capital problem 27 exam kit kaplan

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 18, 2016 at 2:28 pm #349808
    hcarmina
    Member
    • Topics: 7
    • Replies: 5
    • ☆

    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) 246.43

    and the final answer is in npv table is:
    Working capital (150.86) (509.06) 246.43 544.36

    I 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.

    November 18, 2016 at 3:44 pm #349850
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    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.

    November 18, 2016 at 7:00 pm #349874
    hcarmina
    Member
    • Topics: 7
    • Replies: 5
    • ☆

    Thank you! I was so unsecured on my own knowledge that i could not believe that the answer was wrong at the end.

    November 19, 2016 at 4:56 am #349923
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

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