A laboratory within Bayer is considering the five divisible investment proposals below to further upgrade their diagnostic capabilities to ensure continued leadership and state-of-the-art performance. The laboratory uses a 10-year planning horizon, has a MARR of 10 percent, and has a capital limit of $1,000,000.

a. Determine the optimum portfolio, including which investments are fully or partially selected (if partial, give percentage). You may use Excel®; do not use SOLVER.

b. Determine the optimum portfolio and its PW, specifying which investments are fully or partially (give percentage)
selected using (1) the current limit on investment capital, (2) plus 20 percent, and (3) minus 20 percent. Use Excel®
and SOLVER.

c. Determine the optimum portfolio and its PW, specifying which investments are fully or partially (give percentage)
selected using (1) the current MARR, (2) plus 20 percent, and (3) minus 20 percent. Use Excel® and SOLVER.

d. Determine the optimum investment portfolio and its PW when all investments except Investment 3 are divisible, at least two investments must be pursued fully or partially, and no more than three can be pursued fully or partially.

Transcribed Image Text:

Investment 2 3 5 Initial Investment $300,000 $400,000 $450,000 $500,000 $600,000 Annual Receipts $205,000 Annual Disbursements $125,000 Salvage Value $50,000 $230,000 $130,000 $140,000 $50,000 $60,000 $245,000 $260,000 $290,000 $135,000 $150,000 $75,000 $75,000