Question: Brooks Development Corporation ( BDC ) faces the following capital budgeting decision. Six real estate projects are available for investment. The net present value and
Brooks Development Corporation BDC faces the following capital budgeting decision. Six real estate projects are available for investment. The net present value and expenditures required for each project in millions of dollars are as follows.
Project
Net Present Value $ millions $ $ $ $ $ $
Expenditure Required $ millions $ $ $ $ $ $
There are conditions that limit the investment alternatives:
At least two of projects and must be undertaken.
If either project or is undertaken, they must both be undertaken.
Project cannot be undertaken unless both projects and also are undertaken.
The budget for this investment period is $ million.
a
Formulate a binary integer program that will enable BDC to find the projects to invest in to maximize net present value, while satisfying all project restrictions and not exceeding the budget.
Let xi
if project i is undertaken
otherwise
for
i
Give your objective function in millions of
dollars.
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