Note: This Problem Requires the Use of a Linear Programming $$x _ { j } = \left\{ \begin{array} { l } 1 , \text { if project } j \text { is selected } \\0 , \text { otherwise }\end{array} \right.$$

question 1

Multiple Choice

Note: This problem requires the use of a linear programming application such as Solver or Analytic Solver.
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} $$x _ { j } = \left\{ \begin{array} { l } 1 , \text { if project } j \text { is selected } \\0 , \text { otherwise }\end{array} \right.$$
Set up the problem in Excel and find the optimal solution. What is the expected net present value of the optimal solution?

• A) 210
• B) 220
• C) 235
• D) 310
• E) 435

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Definitions:

ACS (American Colonization Society)

An organization established in 1816 to support the migration of free African Americans to Africa, specifically to what would become Liberia.

Decay Theory

A theory that proposes memory fades due to the mere passage of time, information is lost from memory because of disuse.

Deterioration

Deterioration is the process of becoming progressively worse, often referring to the decline in physical condition, quality, or function over time.

Passage Of Time

The process of time moving forward, marked by changes or events that occur.