Note: This Problem Requires the Use of a Linear Programming

question 41

Multiple Choice

Note: This problem requires the use of a linear programming application such as Solver or Analytic Solver.
Your employer is trying to select from a list of possible capital projects. The projects, along with their cost and benefits, are listed below. The capital budget available is $1 million. In addition to spending constraints, your employer would like to select at least two projects. If project 1 is chosen then project 2 cannot be selected. Formulate the problem as a linear program and determine the optimal solution.
$$\begin{array} { c c c c } \text { Project } & \text { Cost } & \text { Net Presert Value } & \text { Notes } \\1 & \$ 250,000 & \$ 500,000 & \text { Carrnot be selected if } 2 \text { is selected } \\2 & \$ 500,000 & \$ 750,000 & \text { Carrot be selected if } 1 \text { is selected } \\3 & \$ 290,000 & \$ 333,000 & \\4 & \$ 650,000 & \$ 400,000 & \\5 & \$ 750,000 & \$ 600,000 &\end{array}$$

• A) Project 1 and project 2
• B) Project 1 and project 3
• C) Project 1 and project 5
• D) Project 2 and project 3
• E) Project 3 and project 5

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