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Chapter 4 (include your formulations, solver files, and optimal solutions) 4-1) A credit union wants to make investments in the following: Type of Investment Vehicle loans Annual Rate of Return () 7 Consumer loans 9 Other secured loans 10 Signature loans Risk-free securities 11 8 The firm will have $3,500,000 available for investment during the coming year. The following restrictions apply: 1) Risk-free securities may not exceed 30% of the total funds, but must comprise at least 5% of the total. 2) Signature loans may not exceed 12% of the funds invested in all loans (vehicle, consumer, other secured loans, and signature loans). 3) Consumer loans plus other secured loans may not exceed the vehicle loans. 4) Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $3,500,000 be allocated to each alternative to maximize annual return? What is the annual return?

Chapter 4 (include your formulations, solver files, and optimal solutions) 4-1) A credit union wants to make investments in the following: Type of Investment Vehicle loans Annual Rate of Return () 7 Consumer loans 9 Other secured loans 10 Signature loans Risk-free securities 11 8 The firm will have $3,500,000 available for investment during the coming year. The following restrictions apply: 1) Risk-free securities may not exceed 30% of the total funds, but must comprise at least 5% of the total. 2) Signature loans may not exceed 12% of the funds invested in all loans (vehicle, consumer, other secured loans, and signature loans). 3) Consumer loans plus other secured loans may not exceed the vehicle loans. 4) Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $3,500,000 be allocated to each alternative to maximize annual return? What is the annual return?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Chapter 4 (include your formulations, solver files, and optimal solutions) 4-1) A credit union wants to make investments in the following: Type of Investment Vehicle loans Annual Rate of Return (%) 7 Consumer loans 9 Other secured loans 10 Signature loans Risk-free securities 11 8 The firm will have S$3,500,000 available for investment during the coming year. The following restrictions apply: 1) Risk-free securities may not exceed 30% of the total funds, but must comprise at least 5% of the total. 2) Signature loans may not exceed 12% of the funds invested in all loans (vehicle, consumer, other secured loans, and signature loans). 3) Consumer loans plus other secured loans may not exceed the vehicle loans. 4) Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $3,500,000 be allocated to each alternative to maximize annual return? What is the annual return?
Transcribed Image Text:Chapter 4 (include your formulations, solver files, and optimal solutions) 4-1) A credit union wants to make investments in the following: Type of Investment Vehicle loans Annual Rate of Return (%) 7 Consumer loans 9 Other secured loans 10 Signature loans Risk-free securities 11 8 The firm will have S$3,500,000 available for investment during the coming year. The following restrictions apply: 1) Risk-free securities may not exceed 30% of the total funds, but must comprise at least 5% of the total. 2) Signature loans may not exceed 12% of the funds invested in all loans (vehicle, consumer, other secured loans, and signature loans). 3) Consumer loans plus other secured loans may not exceed the vehicle loans. 4) Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $3,500,000 be allocated to each alternative to maximize annual return? What is the annual return?
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