FUNDIT has identified multiple projects available for investment. The funding requirements for 3 years and the contribution to wealth of each measured as NPV are given below. All values are in millions. FUNDIT has 9 million in year 1, 14 in year 2, and 14 in year 3 available to invest. What investments should be made assuming FUNDIT can buy a portion of each project and receive a portion of the project NPV based on portion purchased to maximize the wealth contribution to FUNDIT? When formulation make sure the fractional ownership in an investment does not exceed 1. 

a. What is the amount of wealth contribution (the NPV amount from all investments) in decimal fractional millions if an optimal investment strategy is followed?

b. In how many projects does FUNDIT buy the whole investment and does not have to find partners? 

c. How much is invested (dollars in fractional millions) in project G summing across all years? 

d. To manage risk, advisors have recommended that FUNDIT invest no more than 50% in any single investment available so that risk is covered through diversity. What is the new total wealth contribution in decimal fractional millions if this is followed?

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Year 1 Outflow 2.0 Year 2 Outflow 5.0 Year 3 Outflow 3.1 NPV 2.4 A 1.0 3.5 4322 2.1 2.1 B 1.5 236 570 2.5 3.7 6.0 с 3.0 1.5 3.2 1.5 D 2.5 1.0 0.5 0.7 E 6.4 4.9 2.9 4.8 F 3.7 Toolvo 500 8.5 5.8 6.9 G H 4.8 10.2 11.5 10.8 Year 1 Outflow 2.0 Year 2 Outflow 5.0 Year 3 Outflow 3.1 NPV 2.4 A 1.0 3.5 4322 2.1 2.1 B 1.5 236 570 2.5 3.7 6.0 с 3.0 1.5 3.2 1.5 D 2.5 1.0 0.5 0.7 E 6.4 4.9 2.9 4.8 F 3.7 Toolvo 500 8.5 5.8 6.9 G H 4.8 10.2 11.5 10.8

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To determine the optimal investment strategy for FUNDIT and answer the given questions we need to calculate the fractional ownership of each project and the corresponding wealth contributions Lets go ... View the full answer