A division of ConocoPhillips is involved in their periodic capital budgeting activity, and the engineering and operations staffs have identified 10 divisible investments with cash flow parameters shown below. ConocoPhillips uses a 10-year planning horizon and a MARR of 10 percent in evaluating such investments. The division’s capital limit for this budgeting cycle is $2,500,000.

a. Determine the optimum portfolio, including which investments are fully or partially selected (if partial, give percentage). You may use Excel®; do not use SOLVER.

b. Determine the optimum portfolio and its PW, specifying which investments are fully or partially (give percentage)
selected using (1) the current limit on investment capital, (2) plus 20 percent, and (3) minus 20 percent. Use Excel®
and SOLVER.

c. Determine the optimum portfolio and its PW, specifying which investments are fully or partially (give percentage)
selected using (1) the current MARR, (2) plus 20 percent, and (3) minus 20 percent. Use Excel® and SOLVER.

d. Determine the optimum investment portfolio and its PW when Investments 1 through 5 are divisible and Investments 6 through 10 are indivisible. Use Excel® and SOLVER.

e. Determine the optimum investment portfolio and its PW when Investments 1 through 5 are indivisible and Investments 6 through 10 are divisible. Use Excel® and SOLVER.

f. Determine the optimum investment portfolio and its PW when all of the following conditions must be met simultaneously: Investments 1, 3, and 5 are mutually exclusive; investment 4 is contingent on either Investment 2 or Investment 5 being fully or partially funded; at least five investments must be made, albeit partially; Investments 1 through 5 are indivisible, and Investments 6 through 10 are divisible. Use Excel® and SOLVER.

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Investment 1 2 3 4 5 Initial Investment $150,000 $200,000 $225,000 $275,000 $350,000 Annual Return $35,000 $38,000 $45,000 $60,000 $75,000 Salvage Value $25,000 $50,000 $22,500 $27,500 $55,000 Investment 6 7 8 9 10 Initial Investment $400,000 $475,000 $500,000 $550,000 $600,000 Annual Return $95,000 $110,000 $85,000 $120,000 $125,000 Salvage Value $75,000 $50,000 $100,000 $75,000 $75,000