2. Aerotron Radio Inc. has $250,000 available and its engineering staff has proposed the following indivisible investments. With each, Aerotron can exit at the end of its planning horizon of 5 years and have its initial investment returned.

In addition, each year Aerotron will receive the annual return shown below. MARR is 12%.

For the original problem:

a. Which investments should Aerotron select for the optimum portfolio?

b. What is the present worth for the optimum investment portfolio?

c. What is the IRR for the optimum investment portfolio?
In addition to the original problem statement, let investments 1 and 4 be mutually exclusive and investment 3 be contingent on investment 2:

d. Now, which alternatives should Aerotron select?

e. What is the present worth for the optimum investment portfolio?

f. What is the IRR for the optimum investment portfolio?
Consider the original problem:
g. Determine the optimum portfolio (state the investments selected and the portfolio PW) using (1) the current limit on investment capital, (2) plus 20%, and (3) minus 20%.
h. Determine the optimum portfolio (state the investments selected and the portfolio PW) using (1) the current MARR, (2) plus 20%, and (3) minus 20%.

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Investment 1 2 Initial Investment $75,000 Annual Return $65,000 $10,800 $12,000 3 $50,000 $7,500 45 $80,000 $13,750 $100,000 $15,750