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Engineering Computer Science Introduction to mathematical programming

Maximization of Net Present Value (NPV) of Finco: In the given information, each dollar invested reduces the NPV of the company by 10 c and each of debt increases the NPV by 50 10 c . Let the investment done by Fincobe x 1 and debt taken by him be x 2 . The NPV of the company is, NPV = -10 x 1 + 50 x 2 This NPV is to be maximized. So the objective function for the Linear Programming (LP) is. Max z = -10 x 1 + 50 x 2 The provided constraints are: Constraint 1: Finco can invest at most $1 million during the coming year that is the investment should be less than $1 million, so the constraint formed is: x 1 ≤ 1000000 Constraint 2: At most 40% of investment in the debt. So, the constraint formed is: x 2 ≤ 0.4 x 1 Constraint 3: Finco now has $800000 in cash available. All the investment must be paid for from the current cash or borrowed money. So, all the investments and debts must be paid from current cash of $800000

Maximization of Net Present Value (NPV) of Finco: In the given information, each dollar invested reduces the NPV of the company by 10 c and each of debt increases the NPV by 50 10 c . Let the investment done by Fincobe x 1 and debt taken by him be x 2 . The NPV of the company is, NPV = -10 x 1 + 50 x 2 This NPV is to be maximized. So the objective function for the Linear Programming (LP) is. Max z = -10 x 1 + 50 x 2 The provided constraints are: Constraint 1: Finco can invest at most $1 million during the coming year that is the investment should be less than $1 million, so the constraint formed is: x 1 ≤ 1000000 Constraint 2: At most 40% of investment in the debt. So, the constraint formed is: x 2 ≤ 0.4 x 1 Constraint 3: Finco now has $800000 in cash available. All the investment must be paid for from the current cash or borrowed money. So, all the investments and debts must be paid from current cash of $800000

Solution Summary: The author explains that each dollar invested reduces the NPV of the company by 10overline)c and each of debt increases it by 50%.

Introduction to mathematical programming

Introduction to mathematical programming

4th Edition

ISBN: 9780534359645

Author: Jeffrey B. Goldberg

Publisher: Cengage Learning

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Expert Solution & Answer

Chapter 3.6, Problem 5P

Explanation of Solution

Maximization of Net Present Value (NPV) of Finco:

In the given information, each dollar invested reduces the NPV of the company by 10c and each of debt increases the NPV by 5010c.

Let the investment done by Fincobe x₁ and debt taken by him be x₂.

The NPV of the company is,

NPV = -10x1+50x2

This NPV is to be maximized. So the objective function for the Linear Programming (LP) is.

Max z = -10x1+50x2

The provided constraints are:

Constraint 1:

Finco can invest at most $1 million during the coming year that is the investment should be less than $1 million, so the constraint formed is:

x1≤1000000

Constraint 2:

At most 40% of investment in the debt. So, the constraint formed is:

x2≤0.4x1

Constraint 3:

Finco now has $800000 in cash available. All the investment must be paid for from the current cash or borrowed money. So, all the investments and debts must be paid from current cash of $800000

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Chapter 3.6, Problem 4P

Chapter 3.7, Problem 1P

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Chapter 3 Solutions

Introduction to mathematical programming

Ch. 3.1 - Prob. 1P Ch. 3.1 - Prob. 2P Ch. 3.1 - Prob. 3P Ch. 3.1 - Prob. 4P Ch. 3.1 - Prob. 5P Ch. 3.2 - Prob. 1P Ch. 3.2 - Prob. 2P Ch. 3.2 - Prob. 3P Ch. 3.2 - Prob. 4P Ch. 3.2 - Prob. 5P

Ch. 3.2 - Prob. 6P Ch. 3.3 - Prob. 1P Ch. 3.3 - Prob. 2P Ch. 3.3 - Prob. 3P Ch. 3.3 - Prob. 4P Ch. 3.3 - Prob. 5P Ch. 3.3 - Prob. 6P Ch. 3.3 - Prob. 7P Ch. 3.3 - Prob. 8P Ch. 3.3 - Prob. 9P Ch. 3.3 - Prob. 10P Ch. 3.4 - Prob. 1P Ch. 3.4 - Prob. 2P Ch. 3.4 - Prob. 3P Ch. 3.4 - Prob. 4P Ch. 3.5 - Prob. 1P Ch. 3.5 - Prob. 2P Ch. 3.5 - Prob. 3P Ch. 3.5 - Prob. 4P Ch. 3.5 - Prob. 5P Ch. 3.5 - Prob. 6P Ch. 3.5 - Prob. 7P Ch. 3.6 - Prob. 1P Ch. 3.6 - Prob. 2P Ch. 3.6 - Prob. 3P Ch. 3.6 - Prob. 4P Ch. 3.6 - Prob. 5P Ch. 3.7 - Prob. 1P Ch. 3.8 - Prob. 1P Ch. 3.8 - Prob. 2P Ch. 3.8 - Prob. 3P Ch. 3.8 - Prob. 4P Ch. 3.8 - Prob. 5P Ch. 3.8 - Prob. 6P Ch. 3.8 - Prob. 7P Ch. 3.8 - Prob. 8P Ch. 3.8 - Prob. 9P Ch. 3.8 - Prob. 10P Ch. 3.8 - Prob. 11P Ch. 3.8 - Prob. 12P Ch. 3.8 - Prob. 13P Ch. 3.8 - Prob. 14P Ch. 3.9 - Prob. 1P Ch. 3.9 - Prob. 2P Ch. 3.9 - Prob. 3P Ch. 3.9 - Prob. 4P Ch. 3.9 - Prob. 5P Ch. 3.9 - Prob. 6P Ch. 3.9 - Prob. 7P Ch. 3.9 - Prob. 8P Ch. 3.9 - Prob. 9P Ch. 3.9 - Prob. 10P Ch. 3.9 - Prob. 11P Ch. 3.9 - Prob. 12P Ch. 3.9 - Prob. 13P Ch. 3.9 - Prob. 14P Ch. 3.10 - Prob. 1P Ch. 3.10 - Prob. 2P Ch. 3.10 - Prob. 3P Ch. 3.10 - Prob. 4P Ch. 3.10 - Prob. 5P Ch. 3.10 - Prob. 6P Ch. 3.10 - Prob. 7P Ch. 3.10 - Prob. 8P Ch. 3.10 - Prob. 9P Ch. 3.11 - Prob. 1P Ch. 3.11 - Show that Fincos objective function may also be...Ch. 3.11 - Prob. 3P Ch. 3.11 - Prob. 4P Ch. 3.11 - Prob. 7P Ch. 3.11 - Prob. 8P Ch. 3.11 - Prob. 9P Ch. 3.12 - Prob. 2P Ch. 3.12 - Prob. 3P Ch. 3.12 - Prob. 4P Ch. 3 - Prob. 1RP Ch. 3 - Prob. 2RP Ch. 3 - Prob. 3RP Ch. 3 - Prob. 4RP Ch. 3 - Prob. 5RP Ch. 3 - Prob. 6RP Ch. 3 - Prob. 7RP Ch. 3 - Prob. 8RP Ch. 3 - Prob. 9RP Ch. 3 - Prob. 10RP Ch. 3 - Prob. 11RP Ch. 3 - Prob. 12RP Ch. 3 - Prob. 13RP Ch. 3 - Prob. 14RP Ch. 3 - Prob. 15RP Ch. 3 - Prob. 16RP Ch. 3 - Prob. 17RP Ch. 3 - Prob. 18RP Ch. 3 - Prob. 19RP Ch. 3 - Prob. 20RP Ch. 3 - Prob. 21RP Ch. 3 - Prob. 22RP Ch. 3 - Prob. 23RP Ch. 3 - Prob. 24RP Ch. 3 - Prob. 25RP Ch. 3 - Prob. 26RP Ch. 3 - Prob. 27RP Ch. 3 - Prob. 28RP Ch. 3 - Prob. 29RP Ch. 3 - Prob. 30RP Ch. 3 - Prob. 31RP Ch. 3 - Prob. 32RP Ch. 3 - Prob. 33RP Ch. 3 - Prob. 34RP Ch. 3 - Prob. 35RP Ch. 3 - Prob. 36RP Ch. 3 - Prob. 37RP Ch. 3 - Prob. 38RP Ch. 3 - Prob. 39RP Ch. 3 - Prob. 40RP Ch. 3 - Prob. 41RP Ch. 3 - Prob. 42RP Ch. 3 - Prob. 43RP Ch. 3 - Prob. 44RP Ch. 3 - Prob. 45RP Ch. 3 - Prob. 46RP Ch. 3 - Prob. 47RP Ch. 3 - Prob. 48RP Ch. 3 - Prob. 49RP Ch. 3 - Prob. 50RP Ch. 3 - Prob. 51RP Ch. 3 - Prob. 52RP Ch. 3 - Prob. 53RP Ch. 3 - Prob. 54RP Ch. 3 - Prob. 56RP Ch. 3 - Prob. 57RP Ch. 3 - Prob. 58RP Ch. 3 - Prob. 59RP Ch. 3 - Prob. 60RP Ch. 3 - Prob. 61RP Ch. 3 - Prob. 62RP Ch. 3 - Prob. 63RP

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