Abstract
The capital budgeting problem is a multi-constraint Knapsack problem. Hence this paper provides a solution to a capital budgeting problem of Akwa Ibom State, Nigeria using a Branch and Bound approach. The capital projects are summarized in four broad groups: The Economic sector (X1), The Social Service sector (X2), The Environmental/Regional Development sector (X3), and The Administration sector (X4 ). Using Tora software (version 11) for the analysis, it was observed that the optimal solution was found in node 60 while the upper bound and the lower bound were 154.46 and 129.76 respectively. The result shows that the second and the third sector will be selected (X1, X4 =0; X2X3=1)
Key words: Capital budgeting, branch and bound, Knapsack problem, capital projects