Question: Consider the capital budgeting problem where six projects are being considered for execution over the next 3 years. The expected returns for each project and

Consider the capital budgeting problem where six projects are being considered for execution over the next 3 years. The expected returns for each project and the yearly expenditures (in thousands of dollars) are shown in the accompanying table. Assume that each approved project will be executed over the 3-year period. The objective is to select the projects that will maximize the total returns.

Expenditures for
Project Year 1 Year 2 Year 3 Returns
1 5 2 8 20
2 9 7 9 40
3 4 6 3 15
4 7 4 4 21
5 3 5 2 12
6 8 4 9 28
Max. available Funds 26 22 25

Formulate the problem as a linear programming problem with additional constraints on decision variables to be 0 or 1.

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