A real estate development firm, Peterson and Johnson, is considering five possible development projects. The following table
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The owners of the firm, Dave Peterson and Ron Johnson, have raised $20 million of investment capital for these projects. Dave and Ron now want to select the combination of projects that will maximize their total estimated long-run profit (net present value) without investing more that $20 million.
(a) Formulate a BIP model for this problem.
(b) Display this model on an Excel spreadsheet.
(c) Use the computer to solve this model.
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...
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Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
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