Capital Co

Multiple Choice

Capital Co. is considering which of five different projects to undertake in order to maximize its net present value (NPV) . Define X_i as a binary (0-1) variable that equals 1 if project i is undertaken and 0 otherwise, for i = 1,2,3,4,5. The NPV and required capital (in thousands) for each project are listed below.
Project Net Present Value Capital Required
1 60 7
2 50 10
3 40 6
4 20 3
5 30 12
What is the proper objective function?

A) Max X₁ + X₂ + X₃ + X₄ + X₅
B) Min 60X₁ + 50X₂ + 40X₃ + 20X₄ + 30X₅
C) Max 7X₁ + 10X₂ + 6X₃ + 3X₄ + 12X₅
D) Max 60X₁ + 50X₂ + 40X₃ + 20X₄ + 30X₅
E) Min 7X₁ + 10X₂ + 6X₃ + 3X₄ + 12X₅