Problem on working capital

Wilson Electric Company a manufacturer of various types of electrical equipment is examining its working capital investment policy for next year. Projected fixed assets and current liabilities are $20 million and $18 million, respectively. Sales and EBIT are partially a function of the company's investment in working capital particularly its investment in inventories and receivables. Wilson is considering the following three different working capital investment policies:

See attached file for full problem description.

Attachments