Sudden Rich Investment, Inc. (SRI) is developing its investment plan for the next 4 years. The company has identified 5 investment projects. The annual cash flows (in million dollars) that will be generated by each of these projects over the next 4 years are given below

Period: 0 1 2 3 4

Office Building -7.2 -11.5 8.9 -2.5 21.3

Special Project X -5.8 2.1 -0.5 15.6

Special Project Y -6.6 -2.4 17.6 -0.4

Tax-Free Municipal Bond -1.7 2.6

Corporate Bond -1.8 2.7 These are the cash flows that each project will generate if SRI participates fully in that project. Negative numbers represent cash outflows and positive numbers represent cash inflows. All cash is received/expended at the beginning of each period.

Except for the two bonds (Tax-Free Municipal Bond and Corporate Bond) which, if invested, must be fully participated, SRI can choose to participate in any project at any level (0% to 100%) now, but will not be able to alter the participation level afterwards. If a project is not fully participated, the actual cash flows are proportional to the participation level. Below are further investment guidelines.

At least one of the two bonds must be invested. The total amount of money invested in the two special projects, X and Y, cannot exceed 8 million dollars in Period 0.

The cash that will be available at the beginning of each calendar year is given below (Period 0 is now. Period 1 commences 1 year from now, and so on).

Period: 0 1 2 3 4 Available Cash (in million dollars)

9.2 6.5 2.4

The objective of SRI is to determine the investment portfolio that maximizes the sum of discounted cash flows. The interest rate used for discounting is 6.5%. To help meet temporary shortages of cash, SRI can borrow up to $5 million dollars for each of the first two years (Periods 0 and 1) and any borrowed money must be returned one year later. No money can be borrowed for other periods. The interest rate for borrowing is 7.8% per year. Any surplus cash can be put into a risk-free savings account that earns 4% interest per year.