5. Gymnastics4Life is a high-end facility for beginning, intermediate, and elite gymnasts. The latter are drawn from the nearby region for exclusive and dedicated training. In order to maintain their edge, G4L trustees wish to invest up to $350,000 in new methods for critical evaluation and training and are considering the following independent, indivisible, investments, each of which guarantees return of the initial investment at the end of a planning horizon of 7 years. In addition, G4L will receive annual returns as noted below.

MARR is 12%.

For the original problem:

a. Which alternatives should G4L select to form the optimum portfolio?

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

c. What is the IRR for the optimum investment portfolio?
During review, the G4L trustees judge investments 2 and 5 to be considered as mutually exclusive.

d. Which alternatives should now be selected?

e. What is the present worth for G4L’s new optimum investment portfolio?

f. What is the IRR for the 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 Initial Investment Annual Return 1 $150,000 $24,000 2345 2 $130,000 $22,000 3 $100,000 $15,000 4 $160,000 $25,000 $200,000 $30,000