The Tatham Company is considering seven investments. The cash required for each investment and the net present value (NPV) each investment adds to the firm are listed in Table 6.1. The cash available...

The Tatham Company is considering seven investments. The cash required for each investment and the net present value (NPV) each investment adds to the firm are listed in Table 6.1. The cash available for investment is $15,000. Tatham wants to find the investment policy that maximizes its NPV. The crucial assumption here is that if Tatham wants to take part in any of these investments, it must go “all the way.” It cannot, for example, go halfway in investment 1 by investing $2500 and realizing an NPV of $8000. In fact, if partial investments were allowed, we wouldn’t need IP; we could use LP.