Finco must determine how much investment and debtto undertake during the next year. Each dollar investedreduces the NPV of the company by 10¢, and each dollar ofdebt increases the NPV by 50¢ (due to deductibility ofinterest payments). Finco can invest at most $1 millionduring the coming year. Debt can be at most 40% ofinvestment. Finco now has $800,000 in cash available. Allinvestment must be paid for from current cash or borrowedmoney. Set up an LP whose solution will tell Finco how tomaximize its NPV. Then graphically solve the LP
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
Finco must determine how much investment and debt
to undertake during the next year. Each dollar invested
reduces the NPV of the company by 10¢, and each dollar of
debt increases the NPV by 50¢ (due to deductibility of
interest payments). Finco can invest at most $1 million
during the coming year. Debt can be at most 40% of
investment. Finco now has $800,000 in cash available. All
investment must be paid for from current cash or borrowed
money. Set up an LP whose solution will tell Finco how to
maximize its NPV. Then graphically solve the LP
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