A company has 9 projects under considerations. The following table provides the cash outflows required by...

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A company has 9 projects under considerations. The following table provides the cash outflows required by each project during the next two years, and the net present value added by each project. All numbers in the table are in millions of dollars Year 1 cash outflow Year 2 cash outflow Net Present Value (NPV) 1 10 3 14 2 0 100% 9 3 million) 6 5 16 4 6 3 10 Project 5 10 20 38 16 6 6 15 of project 3, of project 6, 7 of project 9 8 4 18 8 8 3 The company has $50 million available for projects during year 1, and $20 million available during year 2. The fund left over in year I can be used in year 2. Assume that the company may undertake a fraction of each project. Formulate an LP to help the company to maximize the NPV of its investmet plan Using What's Best to solve the LP, we obtain that the optimal investment plan is to undertake 100% of project 1, 100% of project 2, 0 of project 4, of project 5, 100% 100% 0 of project 7, of project 8, and 75% The maximum NPV is $ 94 12 9 17 3 24 A company has 9 projects under considerations. The following table provides the cash outflows required by each project during the next two years, and the net present value added by each project. All numbers in the table are in millions of dollars Year 1 cash outflow Year 2 cash outflow Net Present Value (NPV) 1 10 3 14 2 0 100% 9 3 million) 6 5 16 4 6 3 10 Project 5 10 20 38 16 6 6 15 of project 3, of project 6, 7 of project 9 8 4 18 8 8 3 The company has $50 million available for projects during year 1, and $20 million available during year 2. The fund left over in year I can be used in year 2. Assume that the company may undertake a fraction of each project. Formulate an LP to help the company to maximize the NPV of its investmet plan Using What's Best to solve the LP, we obtain that the optimal investment plan is to undertake 100% of project 1, 100% of project 2, 0 of project 4, of project 5, 100% 100% 0 of project 7, of project 8, and 75% The maximum NPV is $ 94 12 9 17 3 24

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