Consider a Capital Budgeting Example with Five Projects from Which

question 54

Short Answer

Consider a capital budgeting example with five projects from which to select. Let x1 = 1 if project a is selected, 0 if not, for a = 1, 2, 3, 4, 5. Projects cost $100, $200, $150, $75, and $300, respectively. The budget is $450.
-Write the appropriate constraint for the following condition: If project 3 is chosen, project 4 must be chosen.

---

Definitions:

Worst-case Scenario

The most severe potential outcome for a situation, often used in risk management and planning.

Forecast Risk

The risk associated with the likelihood that the forecasted figures will not align with the actual results, also known as projection risk.

Accounting Break-even

The point at which total revenues equal total expenses, and the company neither makes a profit nor incurs a loss.

Operating Cash Flow

The cash that a business produces from its regular business activities, essential for maintaining daily operations, paying bills, and funding investments.