A company proposes to invest in the divisible projects. A project can be accepted in the divisible or in whale. If accepted in part, both the cash flow and subsequent receipts are value pro-route. The five projects and their associated cash flows are as follows;

Year A B

0 10,000 20,000

1 20,000 10,000

2 30,000 ___

3 100,000 60,000

The cost of capital applicable for both is 10%. The cash flows occur in exactly 12 months intervals. No project can be deferred. The funds available are restricted as follows

Year funds available shs '000'

1 20,000

2 25,000

3 20,000

Funds not utilized in one year will not be available in subsequent years.

Required;

a) Formulate a linear programming model to solve the above problem.

b) Solve the problem graphically.