Proposals A, B, C, D, E, F and G are being considered with money flows over...

Proposals A, B, C, D, E, F and G are being considered with money flows over 10 years. A B C D E F G Investment $30,000 $10,000 $55,000 $54,000 $20,000 $65,000 $27,000 Net Annual Benefit $7,000 $2,400 $10,000 $12,000 $4,000 $11,500 $7,500 Salvage Value $3,000 $0 $5,000 $2,000 $500 0 $1,000 Proposal (A and G) are mutually exclusive, (C and D) are also mutually exclusive, and proposal B depends on C or D. The MARR is set at 11%. a) Formulate the problem with Integer Programming. b) Which proposal(s) should be selected if the amount of money available for investment is $100,000?

Expert Solution

First of all let us calculate the IRR for each project which is given below:

IRR	19.84%	20.18%	13.32%	18.16%	15.26%	11.99%	24.86%
Year	A	B	C	D	E	F	G
0	30,000.00	10,000.00	55,000.00	54,000.00	20,000.00	65,000.00	27,000.00
1	-7000	-2400	-10000	-12000	-4000	-11500	-7500
2	-7000	-2400	-10000	-12000	-4000	-11500	-7500
3	-7000	-2400	-10000	-12000	-4000	-11500	-7500
4	-7000	-2400	-10000	-12000	-4000	-11500	-7500
5	-7000	-2400	-10000	-12000	-4000	-11500	-7500
6	-7000	-2400	-10000	-12000	-4000	-11500	-7500
7	-7000	-2400	-10000	-12000	-4000	-11500	-7500
8	-7000	-2400	-10000	-12000	-4000	-11500	-7500
9	-7000	-2400	-10000	-12000	-4000	-11500	-7500
10	-10000	-2400	-15000	-14000	-4500	-11500	-8500

After that we shall first allocate our capital to the option having the highest IRR:

Now based on various permutation we can think of the below mentioned combination and can compare the same on the basis of the combined IRR and NPV of proposed investments. This gives us the following result:

Option 1		NPV	₹ 7,417.42	Option 2			NPV	₹ 7,671.21
24.86%	20.18%	18.16%	20.42%	IRR	19.84%	20.18%	18.16%	18.92%
G	B	D	Total	Year	A	B	D	Total
27,000.00	10,000.00	54,000.00	91,000.00	0	30,000.00	10,000.00	54,000.00	94,000.00
-7500	-2400	-12000	-21,900.00	1	-7000	-2400	-12000	-21,400.00
-7500	-2400	-12000	-21,900.00	2	-7000	-2400	-12000	-21,400.00
-7500	-2400	-12000	-21,900.00	3	-7000	-2400	-12000	-21,400.00
-7500	-2400	-12000	-21,900.00	4	-7000	-2400	-12000	-21,400.00
-7500	-2400	-12000	-21,900.00	5	-7000	-2400	-12000	-21,400.00
-7500	-2400	-12000	-21,900.00	6	-7000	-2400	-12000	-21,400.00
-7500	-2400	-12000	-21,900.00	7	-7000	-2400	-12000	-21,400.00
-7500	-2400	-12000	-21,900.00	8	-7000	-2400	-12000	-21,400.00
-7500	-2400	-12000	-21,900.00	9	-7000	-2400	-12000	-21,400.00
-8500	-2400	-14000	-24,900.00	10	-10000	-2400	-14000	-26,400.00

As can be seen above the option 2 gives us much better proposition as although the IRR is higher under option 1 the overall net present value is higher in option two as we have been able to invest more though at a lower IRR but the increase in amount of investment more than compensates for the lower return.

jeff jeffy answered 1 year ago

If there are 7 total notes C, D, E, F, G, A, and B and if...

If there are 7 total notes C, D, E, F, G, A, and B and if a five-note melody is selected at random (so that all melodies counted in part (a) are equally likely to be chosen), what is the probability that the melody will include exactly two “A” notes, but no other repeated notes? (A few allowable examples: AACEG, ACAEG, DFACA, EAABC, etc.)

Seven people (A,B,C,D,E, F, and G) are seated in a row. Suppose A,B, and C are...

Seven people (A,B,C,D,E, F, and G) are seated in a row. Suppose A,B, and C are freshmen, D and E are sophomores and F and G are juniors. How many arrangements are possible if: (a) D and F must sit together? (b) A and C must not sit together? (c) All freshmen must sit together? (d) All freshmen must sit together, all sophomores must sit together, and all juniors must sit together? (e) Exactly two people sit between A and...

(a) (f ∘ g)(3) (b) g(f(2)) (c) g(f(5)) (d) (f ∘ g)(−3) (e) (g ∘ f)(−1) (f) f(g(−1))

A restaurant has dishes A, B, C, D, E, F and G The owners anticipate that...

A restaurant has dishes A, B, C, D, E, F and G The owners anticipate that dishes will be ordered in the following proportions: 30% (A), 15% (B), 20% (C), 5% (D), 8% (E), 12% (F) and 10% (G). The number of orders placed during the first two days of business was 75 (A), 60 (B), 50 (C), 14 (D), 20 (E), 40 (F), and 41 (G). State and conduct the appropriate hypothesis test to determine whether there is...

Consider the relation R= {A, B, C, D, E, F, G, H} and the set of...

Consider the relation R= {A, B, C, D, E, F, G, H} and the set of functional dependencies: FD= {{B}—> {A}, {G}—> {D, H}, {C, H}—> {E}, {B, D}—> {F}, {D}—>{C}, {C}—> {G}} 1) Draw FD using the diagrammatic notation. 2) What are all candidate keys for R? 3) If delete {C}—>{G} and change {C, H}—> {E} to {C, H}—> {E, G}, what are all candidate keys for R

Consider the cross: A/a; b/b; C/c; D/d; E/e x A/a; B/b; c/c; D/d; e/e a) what...

Consider the cross: A/a; b/b; C/c; D/d; E/e x A/a; B/b; c/c; D/d; e/e a) what proportion of the progeny will phenotypically resemble the first parent? b) what proportion of the progeny will genotypically resemble neither parent?

Please fill in the blanks (values of A, B, C, D, E, F, G, H, I...

Please fill in the blanks (values of A, B, C, D, E, F, G, H, I , J) for the following financial statements. The firm’s tax rate is 35.3%. Income Statement for Fiscal Year 2015 Sales 2,000 Cost of goods sold 1,500 Gross margin 500 Selling and general expenses 300 Operating income 200 Interest income 5 205 Interest expense 21 Restructuring charges 14 Income before tax 170 Income tax 60 Net income J Balance Sheet, Year 2014 and Year 2015...

In how many ways can 7 people { A, B, C, D, E, F, G }...

In how many ways can 7 people { A, B, C, D, E, F, G } be seated at a round table if (a) A and B must not sit next to each other; (b) C, D, and E must sit together (i.e., no other person can sit between any of these three)? (c) A and B must sit together, but neither can be seated next to C or D. Consider each of these separately. For (c) you may NOT...

Use the weighted digraph for problems below: V = {a, b, c, d, e, f, g,...

Use the weighted digraph for problems below: V = {a, b, c, d, e, f, g, h} E = {(a,b,6), (a,d,3), (b,c,2), (b,e,5), (c,f,4), (d,e,9), (d,g,1), (e,f,7), (e,g,8), (e,h,2), (f,h,4), (g,h,4)} (3 pts.) What is the length of the longest path from a to h? Show the path! (2 pts.) Does the graph contain a cycle? Justify your answer! (3 pts.) Give the adjacency matrix for the graph. (4 pts.) Provide the order in which nodes would be visited in...

Consider the cities B,C,D,E,F,G The costs of the possible roads between cities are given below: c(B,F)...

Consider the cities B,C,D,E,F,G The costs of the possible roads between cities are given below: c(B,F) = 11 c(B,G) = 10 c(C,G) = 8 c(D,E) = 12 c(D,F) = 13 c(E,F) = 9 c(E,G ) = 7 What is the minimum cost to build a road system that connects all the cities?

Question