Make up an example, as described in Problem 54, with 20 possible investments. However, do it so that the ratios of NPV to cash requirement are in a very tight range, from 3.0 to 3.2. Then use Solver to find the optimal solution when the Solver tolerance is set to its default value of 5%, and record the solution. Next, solve again with the tolerance set to zero. Do you get the same solution? Try this on a few more instances of the model, where you keep tinkering with the inputs. The question is whether the tolerance matters in these types of narrow-range problems.

  • CreatedApril 01, 2015
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