GuptaShashankhw4 - Operations Management (33:623:386) Fall...

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Fall 2010 Assignment 4 Q1. (50 points) You have $5,000,000 to invest in a combination of eight projects. You have a horizon of 8 years. Each project has a stream of cash flow associated with it that is given in the table below. Cash that is not used for any of the projects is deposited in a bank account for 5% annual interest (assume for simplicity that bank savings are compounded annually.) For example, project G requires an investment now, and for each dollar invested now, 40 cents are paid out at the end of years 1 and 2. At the end of year three you are obligated to invest another 60 cents for each dollar you invest now, and at the end of years 4 and 5 you are paid 80 cents for each dollar you invest now, and at the end of year 6 you are paid $2.3 for each dollar you invest now. Each project should be at most 25% of the total investments in all projects (except cash). Projects A and C each should be at least 10% of total projects (except cash again.) In no year your cash at hand can go below $1,000,000. Determine the best way to invest in each project in such a way that your cash balance at the end of year 8 is as large as possible. Assume partial investing and multiple investing is allowed. Put your answer in a worksheet called Q1. Color cells containing the objective function, intermediate results, decision variables and the given data as before. Year Investment Now Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Project A -1 0.2 1.25 Project B -1 .1 .1 .1 1.4 Project C -1 1.6 Project D -1 .1 .15 .15 .15 1.4 Project E -1 -1 2.6 Project F -1 -1 .4 .4 .4 2.6 Project G -1 .4 .4 -.6 .8 .8 2.3 Project H -1 -1
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This note was uploaded on 01/30/2011 for the course 623 386 taught by Professor Staff during the Fall '08 term at Rutgers.

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GuptaShashankhw4 - Operations Management (33:623:386) Fall...

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