Dumaguete City Oil Mills, Inc must choose among a series of new investment alternatives. The potential investment alternatives, the NPV of future cash flows, the capital requirements, and the available funds over the next three years are as follows: NPV (in million pesos) Capital Requirements Alternative Year 1 Year 2 Year 3 Limited warehouse expansion 4.0 3.0 1.0 4.0 Extensive warehouse expansion 6.0 2.5 3.5 3.5 New product development (test market) 10.5 6.0 4.0 5.0 Advertising campaign 4.0 2.0 1.5 8.0 Basic research 8.0 5.0 1.0 4.0 Purchase of new equipment 3.0 1.0 0.5 0.9 Capital funds available 10.5 7.0 8.75 Develop and solve an integer programming model for maximizing the NPV (showing the arithmetic model with its constraints and the optimal solution).
Dumaguete City Oil Mills, Inc must choose among a series of new investment alternatives. The potential investment alternatives, the
NPV (in million pesos) Capital Requirements
Alternative Year 1 Year 2 Year 3
Limited warehouse expansion 4.0 3.0 1.0 4.0
Extensive warehouse expansion 6.0 2.5 3.5 3.5
New product development (test market) 10.5 6.0 4.0 5.0
Advertising campaign 4.0 2.0 1.5 8.0
Basic research 8.0 5.0 1.0 4.0
Purchase of new equipment 3.0 1.0 0.5 0.9
Capital funds available 10.5 7.0 8.75
Develop and solve an integer programming model for maximizing the NPV (showing the arithmetic model with its constraints and the optimal solution).
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