You just won a $100,000 lottery and plan to invest it among the following alternatives ...
You just won a $100,000 lottery and plan to invest it among the following alternatives: You want to invest this $100,000 in such a way to maximize your return from investment (in terms of dollars) one year from now, while meeting the following guidelines: • You must invest at least $20,000 in GF (9% return), and at most $30,000 in EF (7% return). • The amount invested in CD (4% return) should be at least as much as the amount invested in GF. • No more than 60% of the investment can be in GF and EF combined. • EF and CD combined should account for at least 30% of your investment. • Do not assume that you will invest all of $100,000. This decision should be determined by your linear programming model. a. Formulate a linear programming model for your investment decision. (11pts) b. Solve the model using Excel Solver. (6pts) c. Without re-solving the problem, can you tell what would be the effect on your annual return if GF requires a minimum investment of $30,000? (Increase or decrease by how much? Or no change? Why?) (3pts) d. Suppose GF’s return is increased to 10%. Without resolving the problem, can you tell if it is optimal to invest more in GF? What do you think is causing this? (3pts)
8 years ago
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- Youjustwona100000lotteryandplantoinvestitamongthefollowingalternatives.xlsx