Chapter 28. Using Solver for Capital Budgeting

  • How can a company use Solver to determine which projects it should undertake?

Each year, a company such as Eli Lilly needs to determine which drugs to develop; a company like Microsoft, which software programs to develop; a company like Proctor and Gamble, which new consumer products to develop. Excel’s Solver can help a company make these decisions.

How can a company use Solver to determine which projects it should undertake?

Most corporations want to undertake projects that contribute the greatest net present value (NPV), subject to limited resources (usually capital and labor). Let’s say that Microsoft is trying to determine which of 20 software projects it should undertake. The NPV (in millions ...

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