Examlex
The financial CEO is given a group of possible investments projects for his company's capital. For each project, he is given the NPV that each project would add to the firm, as well as the cash outflow required by each project during each year as shown in the table below: Determine the investments that maximize the firm's NPV. The firm has 30 million dollars available during each of the next 5 years. All numbers are in millions of dollars.
Least Squares Method
The least squares method is a statistical technique used to determine the best-fit line for a set of data, by minimizing the sum of the squares of the differences between observed and estimated values.
Best Fit
A method or line that best approximates the relationship between variables in a set of data.
Minimizes
The process of finding the lowest value of a function, often relevant in optimization problems.
Residuals
The differences between observed and predicted values in a statistical model or analysis.
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