Question: A private equity firm is considering five competing projects in which to invest in the upcoming quarter. The firm needs to decide how to allocate
A private equity firm is considering five competing projects in which to invest in the upcoming quarter. The firm needs to decide how to allocate its available capital based upon the combination of projects denoted as A to E selected to maximize returns based upon net present value NPV Table below presents the capital requirements and the NPV for each project, along with the associated risk given as a percentage of the initial investment The company has $ million in capital to allocate, with the goal of having an average associated risk of no more than There are some additional constraints to be met: i if project is selected, then project is also selected; ii one of the two projects A and must be selected but not both; iii at least one of projects and is selected.
Table : Project Data
tableProjectNPV MSRisk Capital MSABCDE
The restrictions related to the nature of the decision variables are:
are real numbers
binary variables
The restrictions related to the nature of the decision variables are:
are real numbers
binary variables
integer
I ONLY NEED THE CORRECT ANSWER CHOICE FROM THE OPTIONS
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