Spencer Enterprises is attempting to choose among a series of new investment alternatives. The potential investment alternatives, the net present value of the future stream of returns, the capital requirements, and the available capital funds over the next three years are summarized as follows:Capital Requirements ($)AlternativeNet Present Value ($)Year 1Year 2Year 3Limited warehouse expansion4,0003,0001,0004,000Extensive warehouse expansion6,0002,5003,5003,500Test market new product10,5006,0004,0005,000Advertising campaign4,0002,0001,5001,800Basic research8,0005,0001,0004,000Purchase new equipment3,0001,000500900Capital funds available10,5007,0008,750a. Develop and solve an integer programming model for maximizing the net present value.b. Assume that only one of the warehouse expansion projects can be implemented. Modify your model from part a.c. Suppose that if test marketing of the new product is carried out, the advertising campaign also must be conducted. Modify your formulation from part b to reflect this new situation.
