Question: Linear programming and capital rationing If we know the cash flow and NPV value for projects A, B, C, and D as presented in

Linear programming and capital rationing If we know the cash flow and NPV value for projects A, B, C, and DTable A Cash Flow ($ millions) Projects Co -15 -7.5 -7.5 0 A B BOD C D C +45 +7.5 +7.5 -60 C +7.5 +35 +22.5

Linear programming and capital rationing If we know the cash flow and NPV value for projects A, B, C, and D as presented in Table A. The projects are subject to several constraints. For one, the total cash outflow in period 0 cannot be more than the $18 million ceiling. In addition, we also know in the first period cannot be more than the $25 million ceiling. 1. Please use this information to set up objective function and constraints to be solved by Excel program. 2. Please describe the procedure of using Excel program to solve X4,XBXC, and XD. 3. When we get the optimal solution, what is the coefficient of the objective function should be? Table A Cash Flow ($ millions) Projects Co -15 -7.5 -7.5 0 A B BOD C D C +45 +7.5 +7.5 -60 C +7.5 +35 +22.5 +90 C3 +5 +20 +15 +60 NPV at 12% ($ millions) +34.72 +41.34 +27.81 +60.88

Step by Step Solution

3.52 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

To solve this linear programming problem in Excel you can use the Solver addin Heres how to set up the objective function and constraints describe the ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!