Riker Cois Considering Which of 4 Different Projects to Undertake in in Order

question 15

Multiple Choice

Riker Co.is considering which of 4 different projects to undertake in order to maximize its net present value (NPV) .Define Xi as a binary variable that equals 1 if project i is undertaken and 0 otherwise,for i = 1,2,3,4.The NPV and required capital (in millions) for each project are listed below.
Which of the following represents the constraint(s) stating that project 1 must be undertaken and at least one of the other projects must be undertaken?

• A)X1 + X2 ≤ 1,and X1 + X3 ≤ 1,and X1 + X4 ≤ 1
• B)X1 ≥1,and X2 + X3 + X4 ≥ 1
• C)X1 + X2 ≥ 1,and X1 + X3 ≥ 1,and X1 + X4 ≥ 1
• D)X1 ≥1,and X2 + X3 + X4 ≤ 3
• E)X1 + X2 + X3 + X4 ≥ 2

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Definitions:

Variable Inputs

Resources used in production that vary with the level of output, such as raw materials.

Short-Run

A period of time in economics where at least one input is fixed, limiting the ability to fully adjust to market changes.

Gasoline Costs

Expenses related to the purchase of gasoline, often significant for individuals and businesses relying on transportation.

Fixed Costs

Fixed costs, which are unaffected by the volume of production or sales, encompassing charges like lease payments, employee salaries, and insurance fees.