The Create Model command creates and solves
a capital budgeting problem. The model is
either a nonlinear or linear program depending on the problem solved.
The problem is to select from a set of alternative projects a portfolio
of projects that provides the greatest economic return (Net Present
Worth) while not exceeding a budget on the amount of the total
initial capital investment. The model may also include risk measured
by the variance of the NPW of the portfolio.
The Multiperiod command accepts data similar to the
capital budgeting problem and creates a model that describes
the cash flow in each period explicitly. In this way, projects
with a non-uniform cash flow can be easily represented. Each
period has a specified cash flow requirement and a feasible
solution must generate sufficient cash to meet these requirements.
The Actions command presents a dialog that allows a model to be solved
to find the optimum portfolio, compute the rate of return for a specified
portfolio, generate an efficient frontier of optimum portfolios and reveal or
hide the math programming model.