Suppose the two expansion projects are mutually exclusive and only one of them can be made. How does this alter the solution in part a?

To add this ability to your model in part a., you only need to add one additional constraint, using the sum of the "investment decisions" of the two expansion projects. Think about all the possibilities for the sum and which you of them you need to exclude. (For example, if one-phase is selected but two-phase is not, the sum of the decisions in cells F2 and F3 will be 1.)

Projects Y1 Capital Y2 Capital Y3 Capital NPV Invest? Total return One-phase Expansion 3,000 1,000 4,000 5,400 19900 Two-phase Expansion 2,500 3,500 3,500 6,800 Total investment Test Market 6,000 4,000 5,000 9,600 OOHPO Y1 9500