Two investments with varying cash flows (in thousands of dollars) are available, as shown in Table....

Two investments with varying cash flows (in thousands of dollars) are available, as shown in Table. At time 0, $10,000 is available for investment, and at time 1, $7,000 is available.

Investment 0 1 2 3

A -6 -5 7 9

B -8 -3 9 7

Assuming that r = 0.40 (4%), set up an LP whose solution maximizes the NPV obtained from these investments. Graphically find the optimal solution to the LP.

Expert Solution

x1 = 1 , x2= .50 , and Max z= 4.22

jeff jeffy answered 2 years ago

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