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.