Determine the optimal project mix

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Reference no: EM13859297

Fox Enterprises is considering six projects for possible construction over the next 4 years. Fox can undertake any of the projects partially or completely. A partial undertaking of a project will prorate both the return and cash outlays proportionately. The expected (present value) returns and cash outlays for the projects are given in the following

Cash Outlay ($1000)

Project

Year 1

Year 2

Year 3

Year 4

Return ($1000)

1

10.5

14.4

2.2

2.4

32.40

2

8.3

12.6

9.5

3.1

35.80

3

10.2

14.2

5.6

4.2

17.75

4

7.2

10.5

7.5

5.0

14.80

5

12.3

10.1

8.3

6.3

18.20

6

9.2

7.8

6.9

5.1

12.35

Available funds ($1000)

60.0

70.0

35.0

20.0

 

Formulate the problem as a linear program (identify your x values, state the objective function, identify your constraints), and determine the optimal project mix that maximizes the total return using Excel Solver. Ignore the time value of money.

Reference no: EM13859297

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