| Abstract: | While some general algorithms for evaluating interrelated capital projects with abandonment values are illustrated in a separate study, this paper shows how an integer program may be used to resolve the project interaction problem when including abandonment value in capital budgeting. In addition, by employing the mathematical programming framework, the optimal capital budgeting decision is obtained for all the projects under consideration. Thus, the technique provided here gives an efficient and general algorithm for capital budgeting decisions. |
