The board of directors of General Wheels Co. is considering seven large capital investments. Each investment can be madeonly once. These investments differ in the estimated long-run profit(net present value) that they will generate as well as in the amountof capital required, as shown by the following table (in units ofmillions of dollars)
The total amount of capital available for these investments is $100million. Investment opportunities 1 and 2 are mutually exclusive,and so are 3 and 4. Furthermore, neither 3 nor 4 can be undertakenunless one of the first two opportunities is undertaken. There areno such restrictions on investment opportunities 5, 6, and 7. The objective is to select the combination of capital investments thatwill maximize the total estimated long-run profit (net presentvalue).