A real estate developer is considering three possible projects: a small apartment complex, a small shopping center, and a mini-warehouse. Each of these requires different funding over the next two years, and the net present values of the investments also vary.

The following table provides the required investment amount (in $1,000s) and the net present value (NPV) of each (also expressed in $1,000s):

INVESTMENT

NPV YEAR 1 YEAR 2

Apartment complex 18 40 30

Shopping center 15 30 20

Mini - warehouse 14 20 20

The company has $80,000 to invest in year 1 and $50,000 to invest in year 2.

(a) Develop an integer programming model to maximize the NPV in this situation.

(b) Solve the problem in part (a) using computer software. Which of the three projects would be undertaken if NPV is maximized? How much money would be used each year?