Probiem 1: HARBOR EAST VENTURE CAPITAL Harbor East Venture Capital {HEVC} specializes in providing venture capital for new technology applications. Currently HEVC has two investment opportunities. The first one is The Wire Systems [WSL an IT startup that needs additional capital to develop an Internet security software package. The second firm is Beyond Armor (BA), a sports apparel company that needs additional capital to develop a new electric scooter helmet. In exchange for their stock, W5 has asked HEVC to provide $500,000 in year 1, $400,000 in year 2, and $400,000 in year 3 over the coming three-year period. In exchange for their stock, BA has asked HEVC to provide $300,000 in year 1, $300,000 in year 2, and $300,000 in year 3 over the same threeyear period. HEVC believes that both investment opportunities are worth pursuing. However, because of other investments, they are willing to commit at most $500,000 in each year. HEVC's financial analysis team reviewed both projects and recommended that the company's objective should be to maximize the total ownership value minus the total investment in WS and BA during each of the three years. HEVC's financial analysis team estimates that with 100% funding W5 stock will have ownership value of $1,900,000, and BA stock will have ownership value of $750,000 for HEVC. HEVC has the option to fund any percentage of WS and BA. The investment amounts and the ownership value for partial funding are computed by multiplying the percentage by the investmentftotal vaiue, respectively. Perform an analysis of HEVC's investment problem, answering the foliowing questions. You can ignore costs of capitallinfiation in your analysis. 1. What capital allocation plan for The Wire Systems and Beyond Armor for the coming threeyear period and the total HEVC investment each year would you recommend? If possible, answer the following two questions using both {a} a reformulation of the original probiem, and {b} solver sensitivity analysis. Do the answers match? Why? [why not?) 2. What effect, if any, would HE'v'C's wiilingness to commit an additional $100,000 during each of the three years have on the recommended investments? What effect would it have on the total profits? Should HEVC commit the additional $100,000 in the first year? 3. What would happen to the investment decisions and to HEVC profits if the ownership vaiue of BA increases from 750,000 to 1000000