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Star Oil has $ 4 0 million available for investment now ( Time 0 ) ; it estimates that one year from now ( Time
Star Oil has $ million available for investment now Time ; it estimates that one year from now Time $ million will be available for investment. Star Oil may purchase any fraction of each investment, but no more than of each opportunity. In this case, the cash outflows and NPV are adjusted accordingly. tableInvestmentsTime cash outflow,Time cash outflow,NPV
For example, if Star Oil purchases of Investment then a cash outflow of times million dollars would be required at Time and a cash outflow of times million would be required at Time The share of Investment would yield an NPV of million dollars.
Star Oil wants to maximize the NPV that can be obtained by investing in Investments Formulate an LP that will help achieve this goal. Assume that any funds left over at Time cannot be used at time
What percentage of Opportunity should Star Oil invest in
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