Solve Problem 2 with the extra assumption that the investments can be grouped naturally as follows: 1–4, 5–8, 9–12, 13–16, and 17–20. a. Find the optimal investments when at most one investment from...

Solve Problem 2 with the extra assumption that the investments can be grouped naturally as follows: 1–4, 5–8, 9–12, 13–16, and 17–20. a. Find the optimal investments when at most one investment from each group can be selected. b. Find the optimal investments when at least one investment from each group must be selected. (If the budget isn’t large enough to permit this, increase the budget to a larger value.)

Problem 2

In the capital budgeting model in Figure 6.1, we supplied the NPV for each investment. Suppose instead that you are given only the streams of cash inflows from each investment shown in the file P06_02.xlsx. This file also shows the cash requirements and the budget. You can assume that (1) all cash outflows occur at the beginning of year 1, (2) all cash inflows occur at the ends of their respective years, and (3) the company uses a 10% discount rate for calculating its NPVs. Which investments should the company make?

Figure 6.1