New Exercise Bank Content Qu$.10-14$

Yakima Construction Corporation $($YCC$)$ is considering a number of different development projects. The cash outflows that would be

required to complete each project are indicated in the table below, along with the expected net present value of each project $($all

values in millions of dollars$).$

Click here for the Excel Data File

Each project must be done in full $($with the corresponding cash flows for all four years$)$ or not done at all. Furthermore, there are the

following additional considerations. Project $1$ cannot be done unless Project $2$ is also undertaken, and projects $3$ and $4$ would compete

with each other, so they should not both be chosen. YCC expects to have the following cash available to invest in these projects: $$30$

million for year $1,$$$25$ million for year $2,$$$16$ million for year $3,$ and $$12$ million for year $4.$ Any available money not spent in a given year

is then available to spend the following year. YCC$\text{'}$s policy is to choose their projects so as to maximize their total expected NPV$.$

Formulate and solve this model on a spreadsheet.

a$.$ Determine the combination of each project that YCC should undertake to maximize total expected NPV$.$

Note: Leave no cells blank. Enter $"0"$ wherever required.

b$.$ Determine the NPV$.$