A Firm Has Prepared the Following Binary Integer Program to Evaluate

question 73

Multiple Choice

A firm has prepared the following binary integer program to evaluate a number of potential new capital projects. The firm's goal is to maximize the net present value of their decision while not spending more than their currently available capital.
Max 100x1 + 120x2 + 90x3 + 135x4
s.t. 150x1 + 200x2 + 225x3 + 175x4 ? 500 {Constraint 1}
X1 + x2 + x3 + x4 ? 2 {Constraint 2}
X2 + x4 ? 1 {Constraint 3}
X2 + x3 ? 1 {Constraint 4}
X1 = x4 {Constraint 5} $$x _ { j } = \left\{ \begin{array} { l } 1 , \text { if project } j \text { is selected } \\0 , \text { otherwise }\end{array} \right.$$
Which of the constraints ensures that at least two of the potential projects will be selected?

• A) Constraint 1
• B) Constraint 2
• C) Constraint 3
• D) Constraint 4
• E) Constraint 5

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Definitions:

Special Item

Unusual or infrequent gains or losses not classified as extraordinary but significantly important to understand a company's financial health.

Asset Increase

An increase in the total value of assets owned by a company, which can occur due to acquisitions, improvements, or valuation increases.

Corresponding Decrease

A decrease in one variable or metric that occurs in response to an increase in another variable.

Liability

A financial obligation or debt that an entity is required to pay to another entity.