An investment club has set a goal of earning 15% on the money it invests in stocks. The members are considering purchasing three possible stocks, with their cost per share (in dollars) and their projected growth per share (in dollars) summarized in the following table. (Let x = computer shares, y = utility shares, and z = retail shares.) Stocks Computer (x) Utility (y) Retail (z) Cost/share 30 44 26 Growth/share 6.00 6.00 2.40 (a) If they have $392,000 to invest, how many shares of each stock should they buy to meet their goal? (If there are infinitely many solutions, express your answers in terms of z as in Example 3.) (x, y, z) = (b) If they buy 1500 shares of retail stock, how many shares of the other stocks should they buy? computer shares utility shares What if they buy 3000 shares of retail stock? computer shares utility shares (c) What is the minimum number of shares of computer stock they should buy? shares What is the number of shares of the other stocks in this case? utility shares retail shares (d) What is the maximum number of shares of computer stock they should purchase? shares What is the number of shares of the other stocks in this case? utility shares retail shares

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

See similar textbooks

Related questions

Question

An investment club has set a goal of earning 15% on the money it invests in stocks. The members are considering purchasing three possible stocks, with their cost per share (in dollars) and their projected growth per share (in dollars) summarized in the following table. (Let x = computer shares, y = utility shares, and z = retail shares.)

	Stocks
	Computer (x)	Utility (y)	Retail (z)
Cost/share	30	44	26
Growth/share	6.00	6.00	2.40

(a) If they have $392,000 to invest, how many shares of each stock should they buy to meet their goal? (If there are infinitely many solutions, express your answers in terms of z as in Example 3.)

(x, y, z) =

(b) If they buy 1500 shares of retail stock, how many shares of the other stocks should they buy?

computer	shares
utility	shares

What if they buy 3000 shares of retail stock?

computer	shares
utility	shares

(c) What is the minimum number of shares of computer stock they should buy?
shares

What is the number of shares of the other stocks in this case?

utility	shares
retail	shares

(d) What is the maximum number of shares of computer stock they should purchase?
shares

What is the number of shares of the other stocks in this case?

utility	shares
retail	shares

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 5 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions