Data Corp Is Considering Which of 4 Different Projects to Undertake

question 69

Multiple Choice

Data Corp. is considering which of 4 different projects to undertake in order to maximize its net present value (NPV) . Define X_i as a binary variable that equals 1 if project i is undertaken and 0 otherwise, for i = 1, 2, 3, 4. The NPV and required capital (in millions) for each project are listed below. Which of the following represents the constraint stating that project 2 can be undertaken only if project 3 is undertaken?

• A) X₂ + X₃ ≤ 1
• B) X₂ - X₃ ≤ 0
• C) X₃ - X₂ ≤ 0
• D) X₂ - X₃ ≤ 1
• E) X₃ - X₂ ≤ 1

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Definitions:

Inventory Cost

The total cost incurred to acquire, hold, and convert raw materials into finished goods, including costs of purchase, handling, and storage.

Sales Commissions

Payments made to sales employees as a percentage of the sales they generate, used as an incentive to drive sales.

Quantity Discounts

Price reductions offered to customers for purchasing goods or services in large quantities.

Periodic Inventory System

A method of inventory valuation for financial reporting purposes where a physical count of the inventory is taken at specific intervals.