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A company is considering investing up to 1.5 million dollars in an investment portfolio consisting of a set of the following five independent capital projects (all of these projects will end at the end of 10 years). The initial investment for Project 1, 2, 3, 4, and 5 is exist300k, exist400k, exist450k. exist500k, and exist600k, respectively. The annual return for these projects are exist80k, exist100k, exist105k, exist125k and exist140k and the salvage value for these projects at the end of year 10 are exist50k, exist50k, exist60k, S75k and exist75k, respectively. Projects 2 and 4 are mutually exclusive. Also, project 1 is contingent on either or both projects 2 and 3. The company's MARR is 10%. Determine the optimal investment portfolio given that:

a) The investment opportunities are indivisible.

b) The investment opportunities are divisible.

Please use the solver tool in excel. Show all steps, formulas and solver parameters used.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92398328

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