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Spencer Enterprises must choose among a series of new investment alternatives. The potential investment alternatives, the net present value of the future stream of returns, the capital requirements, and the available capital funds over the next three years are summarized as follows:   a.)Develop and solve an integer programming model for maximizing the net present value.

Spencer Enterprises must choose among a series of new investment alternatives. The potential investment alternatives, the net present value of the future stream of returns, the capital requirements, and the available capital funds over the next three years are summarized as follows:   a.)Develop and solve an integer programming model for maximizing the net present value.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Spencer Enterprises must choose among a series of new investment alternatives. The potential investment alternatives, the net present value of the future stream of returns, the capital requirements, and the available capital funds over the next three years are summarized as follows:

 

a.)Develop and solve an integer programming model for maximizing the net present value.

 

Net Present Capital Requirements ($) Value ($) Alternative Year 1 Year 2 Year 3 Limited warehouse expansion 4,000 3,000 1,000 4,000 Extensive warehouse expansion 6,000 2,500 3,500 3,500 Test market new product 10,500 6,000 4,000 5,000 Advertising campaign 4,000 2,000 1,500 1,800 Basic research 8,000 5,000 1,000 4,000 Purchase new equipment 3,000 1,000 500 900 Capital funds available 10,500 7,000 8,750
Transcribed Image Text:Net Present Capital Requirements ($) Value ($) Alternative Year 1 Year 2 Year 3 Limited warehouse expansion 4,000 3,000 1,000 4,000 Extensive warehouse expansion 6,000 2,500 3,500 3,500 Test market new product 10,500 6,000 4,000 5,000 Advertising campaign 4,000 2,000 1,500 1,800 Basic research 8,000 5,000 1,000 4,000 Purchase new equipment 3,000 1,000 500 900 Capital funds available 10,500 7,000 8,750
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