Capital Co

question 101

Multiple Choice

Capital Co. is considering which of five different projects to undertake in order to maximize its net present value (NPV) . Define X_i as a binary (0-1) variable that equals 1 if project i is undertaken and 0 otherwise, for i = 1,2,3,4,5. The NPV and required capital (in thousands) for each project are listed below.
Project Net Present Value Capital Required
1 60 7
2 50 10
3 40 6
4 20 3
5 30 12
What is the proper objective function?

• A) Max X₁ + X₂ + X₃ + X₄ + X₅
• B) Min 60X₁ + 50X₂ + 40X₃ + 20X₄ + 30X₅
• C) Max 7X₁ + 10X₂ + 6X₃ + 3X₄ + 12X₅
• D) Max 60X₁ + 50X₂ + 40X₃ + 20X₄ + 30X₅
• E) Min 7X₁ + 10X₂ + 6X₃ + 3X₄ + 12X₅

Recognize the implications of fiscal year alignment with property tax cycles on financial statements.

Comprehend the characteristics and accounting treatment of provisions and contingent liabilities.

Identify the nature of current liabilities and their impact on liquidity.

Distinguish between secured and unsecured notes, and their reporting in financial statements.