# Question: Suppose in the capital budgeting model in Figure 14 40 that

Suppose in the capital budgeting model in Figure 14.40 that each investment requires $2000 during year 2 and only $5000 is available for investment during year 2.

a. Assuming that available money un-invested at the end of year 1 cannot be used during year 2, what combination of investments maximizes NPV?

b. Suppose that any un-invested money at the end of year 1 can be used for investment in year 2. Does your answer to part a change?

a. Assuming that available money un-invested at the end of year 1 cannot be used during year 2, what combination of investments maximizes NPV?

b. Suppose that any un-invested money at the end of year 1 can be used for investment in year 2. Does your answer to part a change?

**View Solution:**## Answer to relevant Questions

How difficult is it to expand the Great Threads model to accommodate another type of clothing? Answer by assuming that the company can also produce sweatshirts. The rental cost for sweatshirt equipment is $1100, the variable ...In the original Western Airlines set-covering model in Figure 14.52, we assumed that each city must be covered by at least one hub. Suppose that for added flexibility in flight routing, Western requires that each city must ...In the last sheet of the finished version of the Fixed Cost Manufacturing file, we illustrated one way to model the Great Threads problem with IF functions, but saw that this approach doesn’t work. Try a slightly different ...A bus company believes that it will need the following numbers of bus drivers during each of the next five years: 60 drivers in year 1; 70 drivers in year 2; 50 drivers in year 3; 65 drivers in year 4; 75 drivers in year 5. ...An oil company produces oil from two wells. Well 1 can produce up to 150,000 barrels per day, and well 2 can produce up to 200,000 barrels per day. It is possible to ship oil directly from the wells to the company’s ...Post your question