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Fox Enterprises is considering six projects for possible construction over the next four ycars. 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 table. Cash outlay ($1000) Project Year ! Year 2 Year 3 Year 4 Return ($1000) 1 10.5 14.4 2.2 2.4 324.00 8.3 12.6 9.5 3.1 358.00 3 10.2 14.2 5.6 4.2 177.50 4 7.2 10.5 7.5 5.0 148.00 5 12.3 10.1 8.3 6.3 182.00 9.2 7.8 6.9 5.1 123.50 Available funds ($1000) 60.0 70.0 35.0 20,0 (d) Suppose in the original model the yearly funds available for any year can be exceeded, if necessary, by borrowing from other financial activities within the company. Ignoring the time value of money, reformulate the LP model, and flind the optimum solution. Would the new solution require borrowing in any ycar? If so, what is the rate of return on borrowed moncy?

Fox Enterprises is considering six projects for possible construction over the next four ycars. 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 table. Cash outlay ($1000) Project Year ! Year 2 Year 3 Year 4 Return ($1000) 1 10.5 14.4 2.2 2.4 324.00 8.3 12.6 9.5 3.1 358.00 3 10.2 14.2 5.6 4.2 177.50 4 7.2 10.5 7.5 5.0 148.00 5 12.3 10.1 8.3 6.3 182.00 9.2 7.8 6.9 5.1 123.50 Available funds ($1000) 60.0 70.0 35.0 20,0 (d) Suppose in the original model the yearly funds available for any year can be exceeded, if necessary, by borrowing from other financial activities within the company. Ignoring the time value of money, reformulate the LP model, and flind the optimum solution. Would the new solution require borrowing in any ycar? If so, what is the rate of return on borrowed moncy?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Fox Enterprises is considering six projects for possible construction over the next four ycars. 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 table. Cash outlay ($1000) Project Year ! Year 2 Year 3 Year 4 Return ($1000) 1 10.5 14.4 2.2 2.4 324.00 8.3 12.6 9.5 3.1 358.00 3 10.2 14.2 5.6 4.2 177.50 4 7.2 10.5 7.5 5.0 148.00 5 12.3 10.1 8.3 6.3 182.00 9.2 7.8 6.9 5.1 123.50 Available funds ($1000) 60.0 70.0 35.0 20,0 (d) Suppose in the original model the yearly funds available for any year can be exceeded, if necessary, by borrowing from other financial activities within the company. Ignoring the time value of money, reformulate the LP model, and flind the optimum solution. Would the new solution require borrowing in any ycar? If so, what is the rate of return on borrowed moncy?
Transcribed Image Text:Fox Enterprises is considering six projects for possible construction over the next four ycars. 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 table. Cash outlay ($1000) Project Year ! Year 2 Year 3 Year 4 Return ($1000) 1 10.5 14.4 2.2 2.4 324.00 8.3 12.6 9.5 3.1 358.00 3 10.2 14.2 5.6 4.2 177.50 4 7.2 10.5 7.5 5.0 148.00 5 12.3 10.1 8.3 6.3 182.00 9.2 7.8 6.9 5.1 123.50 Available funds ($1000) 60.0 70.0 35.0 20,0 (d) Suppose in the original model the yearly funds available for any year can be exceeded, if necessary, by borrowing from other financial activities within the company. Ignoring the time value of money, reformulate the LP model, and flind the optimum solution. Would the new solution require borrowing in any ycar? If so, what is the rate of return on borrowed moncy?
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