The Northampton County Development Corporation (NCDC) plans to take part in three possible development projects to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Northampton County Development Corporation (NCDC) plans to take part in three possible development projects to be launched in 2022. Each project requires a significant investment over the next few years, and then would be sold upon completion. The estimated cash flows (selling prices and costs, in millions of dollars) associated with each project are shown in the table below. Project B Project C Year 2 3 4 5 6 Project A 4 -6 -6 24 0 0 -8 -8 -4 -4 30 0 -10 -7 -7 -5 -3 44 NCDC has $10 million cash reserves available at the end of 2021; they also expect to receive $6 million per year from other currently ongoing projects by the end of years 2022 through 2027. The corresponding cash amounts will be available for investments in the following years for projects A, B, and C. We assume that NCDC can participate in each project according to a continuous decision scale (ranging from 0% to 100% participation). If NCDC participates at less than 100% in a certain project, then all cash flow needs associated with that project are reduced proportionally. NCDC plans to finance all project participation from its own resources, without receiving bank loans. NCDC policy requires ending each year with a cash balance of at least $1 million. Your task is to develop a spreadsheet model to analyze and solve the problem. 2.1 What are the decision options? What constraints need to be considered? What should the objective be? 2.2 For testing purposes, assume that NCDC finances Project A at 100% and Project C at 50%. Calculate by hand what the ending cash position would be at the end of year 2022 and year 2023. 2.3 Build a spreadsheet model using the appropriate model template, first for years 2022 and 2023, and then test the model, by entering another tentative data set of your choice. 2.4 Develop and solve the full-scale model. Summarize your recommendation for NCDC in a paragraph. The Northampton County Development Corporation (NCDC) plans to take part in three possible development projects to be launched in 2022. Each project requires a significant investment over the next few years, and then would be sold upon completion. The estimated cash flows (selling prices and costs, in millions of dollars) associated with each project are shown in the table below. Project B Project C Year 2 3 4 5 6 Project A 4 -6 -6 24 0 0 -8 -8 -4 -4 30 0 -10 -7 -7 -5 -3 44 NCDC has $10 million cash reserves available at the end of 2021; they also expect to receive $6 million per year from other currently ongoing projects by the end of years 2022 through 2027. The corresponding cash amounts will be available for investments in the following years for projects A, B, and C. We assume that NCDC can participate in each project according to a continuous decision scale (ranging from 0% to 100% participation). If NCDC participates at less than 100% in a certain project, then all cash flow needs associated with that project are reduced proportionally. NCDC plans to finance all project participation from its own resources, without receiving bank loans. NCDC policy requires ending each year with a cash balance of at least $1 million. Your task is to develop a spreadsheet model to analyze and solve the problem. 2.1 What are the decision options? What constraints need to be considered? What should the objective be? 2.2 For testing purposes, assume that NCDC finances Project A at 100% and Project C at 50%. Calculate by hand what the ending cash position would be at the end of year 2022 and year 2023. 2.3 Build a spreadsheet model using the appropriate model template, first for years 2022 and 2023, and then test the model, by entering another tentative data set of your choice. 2.4 Develop and solve the full-scale model. Summarize your recommendation for NCDC in a paragraph.
Expert Answer:
Answer rating: 100% (QA)
21 Decision options constraints and objective Decision options NCDC can choose to participate in each project at any percentage from 0 to 100 Constraints NCDC must end each year with a cash balance of ... View the full answer
Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
Posted Date:
Students also viewed these accounting questions
-
You have been asked to take part in an upcoming Young Professionals meeting in your area. The program planned for the evening focuses on todays manufacturing environment. Specifically, you have been...
-
You have been asked to take part in an upcoming Young Professionals meeting in your area. The program planned for the evening focuses on today's manufacturing environment. Specifically, you have been...
-
You have been asked to take part in an upcoming Young Professionals meeting in your area. The program planned for the evening will cover many aspects of todays business world. Specifically, you have...
-
If you could choose, which type of school would you want your imaginary child(ren) to attend?
-
On January 1, 2014, Jade Company issued $2,000,000 face value, 7%, 10-year bonds at $2,147,202. This price resulted in a 6% effective-interest rate on the bonds. Jade uses the effective-interest...
-
Why are double- rodded lines of levels recommended for precise work?
-
Assume that Fossil sold watches to a department store on account for \($43,000\). How would this transaction affect Fossils accounting equation? a. Increase both liabilities and stockholders equity...
-
Flint Hills Middle School wants to raise money for a new sound system for its auditorium. The primary fund-raising event is a dance at which the famous disc jockey Jay Dee will play classic and...
-
The following totals for the month of April were taken from the payroll records of Pharoah Service Company. Salaries FICA taxes withheld $90000 6885 Income taxes withheld 18800 Medical insurance...
-
Air is compressed steadily by a 5-kW compressor from 100 kPa and 17°C to 600 kPa and 167°C at a rate of 1.6 kg/min. During this process, some heat transfer takes place between the compressor...
-
Question 2 With the aid of a diagram, explain why monopoly is regarded inefficient compared to perfectly competitive market. a. b. C. d. [5 marks] What are the FOUR (4) ways that government...
-
Handy Home sells windows ( 6 0 % of sales ) and doors ( 4 0 % of sales ) . The selling price of each window is $ 4 0 0 and of each door is $ 9 0 0 . The variable cost of each window is $ 2 2 5 and of...
-
Kohl Company provides warranties for many of its products. The January 1 , 2 0 2 2 , balance of the Estimated Warranty Liability account was $ 2 5 , 1 0 0 . Based on an analysis of warranty claims...
-
Consider the given partial LINDO Code: MAX 50 BR+ 20 IC + 30 COLA + 80 PC s.t. 40 BR+ 20 IC + 15 COLA + 50 PC
-
1 : Refer to a case study - Australia Post in Appendix A List at least five change requirements. Part 2: Discuss with your classmates who play the role of managers/specialists to identify major...
-
The gallbladder has a capacity of between 1.2 and 1.7 fluidounces. What is the capacity in milliliters of a gallbladder thatcan hold 1.42 fluid ounces? (There are 32 fl oz/qt.)
-
How can your work as medical administrative help people be ethical consumers? How can you make your company more socially-beneficial?
-
Time Solutions, Inc. is an employment services firm that places both temporary and permanent workers with a variety of clients. Temporary placements account for 70% of Time Solutions' revenue;...
-
Two manufacturers currently are competing for sales in two different but equally profitable product lines. In both cases the sales volume for manufacturer 2 is three times as large as that for...
-
Reconsider the linearly constrained convex programming model given in Prob. 13.9-9. Follow the instructions of parts (a), (b), and (c) of Prob. 13.9-10 for this model, except use (x1, x2) = (1/2,...
-
Consider the following nonlinear programming problem: Maximize Z = 5x1 + x2, subject to 2x12 + x2 13 x12 + x2 9 and x1 0, x2 0. (a) Show that this problem is a convex programming problem. (b) Use...
-
State the main audit objectives for (1) sales transactions and (2) debtors balances.
-
What are the major files and printed outputs of computerised processing for sales transactions?
-
What is the sequence of steps normally associated with processing of credit sales? For each step, identify one control.
Study smarter with the SolutionInn App