Posted by **ama** on Monday, May 14, 2012 at 9:13am.

Finco must determine how much investment and debtto undertake during the next year. Each dollar invested reduces the NPV of the company by 10¢, and each dollar of debt increases the NPV by 50¢ (due to deductibility of interest payments). Finco can invest at most $1 millionduring the coming year. Debt can be at most 40% of investment. Finco now has $800,000 in cash available. Allinvestment must be paid for from current cash or borrowed money. Set up an LP whose solution will tell Finco how tomaximize its NPV.

- Linear Programming -
**Anonymous**, Saturday, January 16, 2016 at 2:31am
max z = .5x1 - .1 x2

s.t constraints

x2< = 1000000

x1<= 400000

x1 + x2 = 800,000

- Linear Programming -
**naomi**, Monday, January 16, 2017 at 12:41pm
x1 = amount invested

x2= amount borrowed

objective function:

Max = -0.10x1+0,5x2

s.t.:

x1 <= 1,000,000

x1 - x2 <= 800,000

x2 <= 0.4x1

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