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8. Spencer Enterprises must choose among a series of new investment alternatives. The potential investment alternatives, the net present value of the future stream of returns, the capital requirements, and the available capital funds over the next three years are sum- marized as follows: Net Present Capital Requirements ($) Alternative Value ($) Year 1 Year 2 Year 3 Limited warehouse expansion 4,000 3,000 1,000 4,000 Extensive warehouse expansion 6,000 2,500 3,500 3,500 Test market new product 10,500 6,000 4,000 5,000 Advertising campaign 4,000 2,000 1,500 1,800 Basic research 8,000 5,000 1,000 4,000 Purchase new equipment 3,000 1,000 500 900 Capital funds available 10,500 7,000 8,750 a. Develop and solve an integer programming model for maximizing the net present value.

8. Spencer Enterprises must choose among a series of new investment alternatives. The potential investment alternatives, the net present value of the future stream of returns, the capital requirements, and the available capital funds over the next three years are sum- marized as follows: Net Present Capital Requirements ($) Alternative Value ($) Year 1 Year 2 Year 3 Limited warehouse expansion 4,000 3,000 1,000 4,000 Extensive warehouse expansion 6,000 2,500 3,500 3,500 Test market new product 10,500 6,000 4,000 5,000 Advertising campaign 4,000 2,000 1,500 1,800 Basic research 8,000 5,000 1,000 4,000 Purchase new equipment 3,000 1,000 500 900 Capital funds available 10,500 7,000 8,750 a. Develop and solve an integer programming model for maximizing the net present value.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter1: Introduction And Goals Of The Firm
Section: Chapter Questions
Problem 2.5CE: Energy entrepreneur T. Boone Pickens has proposed converting the trucking fleet in the United States...
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8. Spencer Enterprises must choose among a series of new investment alternatives. The potential investment alternatives, the net present value of the future stream of returns, the capital requirements, and the available capital funds over the next three years are sum- marized as follows: Net Present Capital Requirements ($) Alternative Value ($) Year 1 Year 2 Year 3 Limited warehouse expansion 4,000 3,000 1,000 4,000 Extensive warehouse expansion 6,000 2,500 3,500 3,500 Test market new product 10,500 6,000 4,000 5,000 Advertising campaign 4,000 2,000 1,500 1,800 Basic research 8,000 5,000 1,000 4,000 Purchase new equipment 3,000 1,000 500 900 Capital funds available 10,500 7,000 8,750 a. Develop and solve an integer programming model for maximizing the net present value.
Transcribed Image Text:8. Spencer Enterprises must choose among a series of new investment alternatives. The potential investment alternatives, the net present value of the future stream of returns, the capital requirements, and the available capital funds over the next three years are sum- marized as follows: Net Present Capital Requirements ($) Alternative Value ($) Year 1 Year 2 Year 3 Limited warehouse expansion 4,000 3,000 1,000 4,000 Extensive warehouse expansion 6,000 2,500 3,500 3,500 Test market new product 10,500 6,000 4,000 5,000 Advertising campaign 4,000 2,000 1,500 1,800 Basic research 8,000 5,000 1,000 4,000 Purchase new equipment 3,000 1,000 500 900 Capital funds available 10,500 7,000 8,750 a. Develop and solve an integer programming model for maximizing the net present value.
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