## Question

# A company is planning its capital budget over the next several years. There are ten projects under consideration. A calculation has been made of the

A company is planning its capital budget over the next several years. There are ten projects under consideration. A calculation has been made of the expected net present value of each project, along with the cash outflow that would be required over the next four years (as shown in the table). There also are the following contingency constraints: (a) at least one of the project 2, 3, or 4 must be done, (b) projects 6 and 8 cannot be done together, (c) project 5 and 7 are mutually exclusive, and (d) project 9 can only be done if project 3 is done. Formulate and solve a BIP model in a spreadsheet to determine which projects should be pursued to maximize the total expected net present value.

## Cash Onfollow Required ($ million) Projjects Cash Available (Smillion) S 6 10 Year 1 Year 2 20 20 Year 3 20 Your 4 2 20 NPV (Smi) 10 12 21 16 18 20

## Step by Step Solution

There are 3 Steps involved in it

### Step: 1

lets formulate and solve the Binary Integer Programmin...### Get Instant Access to Expert-Tailored Solutions

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### Step: 2

### Step: 3

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