J1 J2 J3 J4

C1 50 46 42 40
C2 51 48 44 -
C3 - 47 45 45
 Job 1 Job 2 Job 3 Job 4
Contractor 1 50 46 42 40
Contractor 2 51 48 44 —
Contractor 3 — 47 45 45

Contractor 1 can only do one job

Contractor 2 and 3 can only do two jobs

What about: contractor 2 cannot take Job 2 and Job 3?

 Possible building sites
Region Sanford Altamonte Apopka CasselberryMaitland
1 x 0 x 0 0
2 x x 0 x x
3 0 x 0 x 0
4 0 0 x 0 x
5 x x 0 0 0
6 0 0 x 0 x
7 0 0 0 x x
Capital Budgeting / Project Selection

Estimated
Projec NPV (in
t Do it? £000s) Year 1
1 0 141 75
2 0 187 35
3 0 121 15
4 0 83 20
5 0 265 25
6 0 127 50
7 0 925 35
8 1 844 15
9 1 676 20
10 0 699 25
11 0 56 15
12 0 24 20
13 1 575 25
14 0 610 75
15 0 649 35
16 1 765 15
17 0 439 20
18 0 812 25
19 0 66 35
20 0 127 20
Annual Total 75
Total NPV (in £000s) 2860 Annual Budget 250
of selected projects
Capital (in £000s) required in

Year Year
Year 2 Year 3 4 5
25 20 15 10 1
35 0 0 30 1
15 15 15 15 1
20 10 5 5 1
25 20 20 20 1
20 10 30 40 1
35 0 0 30 1
15 15 15 15 1
20 10 5 5 1
25 20 20 20 1
15 0 0 30 1
20 15 15 15 1
25 10 5 5 1
25 0 0 30 1
35 15 15 15 1
15 10 5 5 1
20 20 20 20 1
25 0 0 30 1
35 0 20 20 1
20 10 30 40 1
75 45 30 30
80 50 50 50
Capital Budgeting / Project Selection
Capital (in £000s) required in
Estima
ted
NPV
Projec (in
t Do it? £000s) Year 1 Year 2 Year 3 Year 4
1 0 141 75 25 20 15
2 0 187 35 35 0 0
3 0 121 15 15 15 15
4 0 83 20 20 10 5
5 0 265 25 25 20 20
6 0 127 50 20 10 30
7 0 925 35 35 0 0
8 0 844 15 15 15 15
9 1 676 20 20 10 5
10 0 699 25 25 20 20
11 0 56 15 15 0 0
12 0 24 20 20 15 15
13 1 575 25 25 10 5
14 0 610 75 25 0 0
15 0 649 35 35 15 15
16 1 765 15 15 10 5
17 1 439 20 20 20 20
18 0 812 25 25 0 0
19 0 66 35 35 0 20
20 0 127 20 20 10 30
Annual Total 80 80 50 35
Total NPV (in £000s) 2455 Annual Budget 250 80 50 50
of selected projects

Either project 8 or 16
1 1
) required in

Year 5
10 1
30 1
15 1
5 1
20 1
40 1
30 1
15 1
5 1
20 1
30 1
15 1
5 1
30 1
15 1
5 1
20 1
30 1
20 1
40 1
35
50
Capital Budgeting / Project Selection
Capital (in £000s) required in
Estima
ted
NPV
Projec (in
t Do it? £000s) Year 1 Year 2 Year 3 Year 4
1 0 141 75 25 20 15
2 0 187 35 35 0 0
3 0 121 15 15 15 15
4 0 83 20 20 10 5
5 0 265 25 25 20 20
6 0 127 50 20 10 30
7 1 925 35 35 0 0
8 1 844 15 15 15 15
9 1 676 20 20 10 5
10 1 699 25 25 20 20
11 0 56 15 15 0 0
12 0 24 20 20 15 15
13 0 575 25 25 10 5
14 0 610 75 25 0 0
15 0 649 35 35 15 15
16 1 765 15 15 10 5
17 0 439 20 20 20 20
18 1 812 25 25 0 0
19 0 66 35 35 0 20
20 0 127 20 20 10 30
Annual Total 135 135 55 45
Total NPV (in £000s) 250 80 50 50
of selected projects 4721 Annual Budget 250 195 110 105
) required in

Year 5
10 1
30 1
15 1
5 1
20 1
40 1
30 1
15 1
5 1
20 1
30 1
15 1
5 1
30 1
15 1
5 1
20 1
30 1
20 1
40 1
105
50
110
1 0 141 75 25 20 15
2 1 187 35 35 0 0
3 0 121 15 15 15 15
4 0 83 20 20 10 5
5 0 265 25 25 20 20
6 0 127 50 20 10 30
7 1 925 35 35 0 0
8 1 844 15 15 15 15
9 1 676 20 20 10 5
10 1 699 25 25 20 20
11 1 56 15 15 0 0
12 0 24 20 20 15 15
13 1 575 25 25 10 5
14 1 610 75 25 0 0
15 1 649 35 35 15 15
16 1 765 15 15 10 5
17 1 439 20 20 20 20
18 1 812 25 25 0 0
19 1 66 35 35 0 20
20 0 127 20 20 10 30
Annual Total 120 120 100 40
Total NPV (in £000s) 250 80 50 50
of selected projects 7303 Annual Budget 250 210 140 90
10 1
30 1
15 1
5 1
20 1
40 1
30 1
15 1
5 1
20 1
30 1
15 1
5 1
30 1
15 1
5 1
20 1
30 1
20 1
40 1
100
50
100
DATA
Annual Return
Year NBS NMC CRT IBC
1 8.0% 12.0% 10.9% 11.2%
2 9.2% 8.5% 22.0% 10.8%
3 6.7% 13.0% 19.0% 9.7%
4 -3.2% -2.6% 37.9% 11.6%
5 18.5% 7.8% -11.8% -1.6%
6 7.4% 3.2% 12.9% -4.1%
7 13.0% 9.8% -7.5% 8.6%
8 20.0% 13.5% 9.3% 6.8%
9 14.0% 6.5% 48.7% 11.9%
10 20.5% -3.5% -1.9% 12.0%
11 14.0% 17.5% 19.1% 8.3%
12 19.0% 14.5% -3.4% 6.0%
13 9.0% 18.9% 43.0% 10.2%