A company is considering the seven independent investment projects listed below. Each project has an initial...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A company is considering the seven independent investment projects listed below. Each project has an initial investment required, the payoff as a net present value and the time required on the project by an expert consultant (in months). The company has a total budget of R450 000 and 12 months of expert consultant time available for all projects. Each project can either be accepted in total or be rejected in total. Project Initial investment Net present value Expert consultant time Project A R110 000 R100 000 2 Project B R70 000 R90 000 1 Project C R60 000 R60 000 3 Project D R95 000 R60 000 1 Project E R50 000 Project F R70 000 R90 000 Project G R78 000 R100 000 R65 000 2 1 4 a. Formulate the problem as a mathematical programming model by specifying the decision variables, the objective function, the constraints and restriction on decision variables. b. Use the Solver tool in a spreadsheet to find an optimal solution to this capital rationing investment decision. Provide as your answer the selected projects, the total NPV, total budget and total time required by the consultant. A company is considering the seven independent investment projects listed below. Each project has an initial investment required, the payoff as a net present value and the time required on the project by an expert consultant (in months). The company has a total budget of R450 000 and 12 months of expert consultant time available for all projects. Each project can either be accepted in total or be rejected in total. Project Initial investment Net present value Expert consultant time Project A R110 000 R100 000 2 Project B R70 000 R90 000 1 Project C R60 000 R60 000 3 Project D R95 000 R60 000 1 Project E R50 000 Project F R70 000 R90 000 Project G R78 000 R100 000 R65 000 2 1 4 a. Formulate the problem as a mathematical programming model by specifying the decision variables, the objective function, the constraints and restriction on decision variables. b. Use the Solver tool in a spreadsheet to find an optimal solution to this capital rationing investment decision. Provide as your answer the selected projects, the total NPV, total budget and total time required by the consultant.
Expert Answer:
Answer rating: 100% (QA)
To formulate the problem as a mathematical programming model we can use binar... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
Students also viewed these general management questions
-
Use the project information below to answer parts a-e. Each project has an initial start-up cost of $10,000, and the cost of capital for each project is 12%. The projects' expected net cash flows are...
-
The ChipTech Company is considering the acquisition of four capital investment projects. The projects under consideration are mutually exclusive. The company is considering buying new design...
-
Create a use case diagram that would illustrate the use cases for the following dentist office system: Whenever new patients are seen for the first time, they complete a patient information form that...
-
How many students answered the second question correctly, but not the first? The results from an exam taken by 150 students were as follows: 90 students correctly answered the first question, 71...
-
A manufacturer has found that the cost C and revenue R (in dollars) in one month are related by the equation Find the rate of change of revenue with respect to time when the cost is changing by $15...
-
The area vector of a rectangular loop that is initially \(\ell_{\mathrm{i}}=300 \mathrm{~mm}\) long and \(w_{\mathrm{i}}=200 \mathrm{~mm}\) wide is aligned with the direction of a uniform magnetic...
-
Sustainable Industries manufactures cardboard containers (boxes) made from recycled paper products. The company operates two divisions, paper recycling and box manufacturing, as decentralized...
-
At a fundamental level, all input ( as well as output ) is done on a character - by - character basis. A . True B . False
-
The Garden Ornament Company manufactures two types of garden ornament a duck and a heron The information presented in Tables T1 to T5 has been prepared as a result of discussions by line managers for...
-
Imperial plc, a UK multinational corporation financed by only equity is looking into venturing into the overseas market. It is evaluating whether it should set up a plant in Malaysia. The project...
-
If you can amend provisions of the Corporation Code, what are these and why? Provide the amended provisions.
-
The owners of a start-up invest $1,000,000 into the business. After one year of operations, the business has assets of $850,000 and losses of $300,000. What are the total liabilities at the end of...
-
Greg. age 45, has a whole life policy with a death benefit, cash value, annual premium. What is the amount of the pure fife insurance protection element at age 45 ?
-
How much must a business pay for a fire insurance policy with a face value $750,000, if the annual premium rate is $0.23 per $1,000?
-
How are the physical landscapes of the Canadian Shield different from the Appalachian Uplands in Quebecand what geomorphic processes helped shape these two landform regions?
-
Rewrite the expression as one summation: E Cnx" + 2x E Cn+1x" + E, Cnx"+1 In=1 The new summation will begin at k = A Before writing the summation term, we write what term? Type each subscript...
-
Using (1) or (2), find L(f) if f(t) if equals: t cos 4t
-
Suppose 2-year Treasury bonds yield 4.5%, while 1-year bonds yield 3%. r* is 1%, and the maturity risk premium is zero. a. Using the expectations theory, what is the yield on a 1-year bond 1 year...
-
Would a failure to recognize growth options tend to cause a firms actual capital budget to be above or below the optimal level? Would your answer be the same for abandonment, timing, and flexibility...
-
Part I of this case, presented in Chapter 3, discussed the situation of DLeon Inc., a regional snack foods producer, after an expansion program. DLeon had increased plant capacity and undertaken a...
-
1. Describe the bases of power held by Dr. Jamie Thompson. Describe the bases of power held by Dr. Elizabeth Clarke. 2. What activities and people have contributed to Jaime Thompsons power? What...
-
What is the current in the wire in Figure Q22.1? 1.0 VR + 1.0-1.0V + FIGURE Q22.1
-
Electroconvulsive therapy is a last-line treatment for certain mental disorders. In this treatment, an electric current is passed directly through the brain, inducing seizures. The total charge that...
Study smarter with the SolutionInn App