Develop a linear programming model to minimize the total dollars needed to be invested now to meet the expansion cash needs in the next 8 years. Hint: this is the objective function. Use Excel Solver, solving method: Simplex LP.How many units of each security 1, 2, and 3 should the corporation purchase? What is the investment amount in each security 1, 2, and 3 in year 1?How much should the corporation place in the savings account in each of the 8 years?Assuming the corporation currently has $1.8 Million available cash to invest and given the cash needs for the expansion, is the investment plan that you developed feasible? Explain your answer and provide reasoning. I am unable to figure out how to calculate the optimal solution amounts so that I can calculate teh remaining items ScenarioYour corporation has just approved an 8-year expansion plan to grow itsmarket share. The plan requires an influx of cash in each of the 8 years.Management wants to develop a financial plan to ensure the cash neededfor the expansion will be available at the beginning of each of the 8years.The corporation has the following investment options:SecurityPrice perReturn RateYears tounit(%)Maturity$1,20010.2552$1,0006.75506.$1,17512.110Savings5.500Account3. Each unit of security 1, 2, and 3 guarantees to pay $1,000 at maturity.Investments in these securities must take place only at the beginning ofyear 1 and will be held until maturity. Any funds not invested insecurities will be invested in a savings account-that pays the annualinterest rates noted above.The following table summarizes the cash needs for the expansion planfor each of the 8 years:Year 1 = $250,000Year 5 = $295,000%3DYear 2 = $300,000Year 6 = $310,000Year 3$225,000Year 7$280,000%DYear 4 = $235,000Year 8 =$305,000

Excel Solver Model: Add the following solver parameters: Solution:

Develop a linear programming model to minimize the total dollars needed to be invested now to meet the expansion cash needs in the next 8 years. Hint: this is the objective function. Use Excel Solver, solving method: Simplex LP. How many units of each security 1, 2, and 3 should the corporation purchase? What is the investment amount in each security 1, 2, and 3 in year 1? How much should the corporation place in the savings account in each of the 8 years? Assuming the corporation currently has $1.8 Million available cash to invest and given the cash needs for the expansion, is the investment plan that you developed feasible? Explain your answer and provide reasoning. I am unable to figure out how to calculate the optimal solution amounts so that I can calculate teh remaining items

Develop a linear programming model to minimize the total dollars needed to be invested now to meet the expansion cash needs in the next 8 years. Hint: this is the objective function. Use Excel Solver, solving method: Simplex LP. How many units of each security 1, 2, and 3 should the corporation purchase? What is the investment amount in each security 1, 2, and 3 in year 1? How much should the corporation place in the savings account in each of the 8 years? Assuming the corporation currently has $1.8 Million available cash to invest and given the cash needs for the expansion, is the investment plan that you developed feasible? Explain your answer and provide reasoning. I am unable to figure out how to calculate the optimal solution amounts so that I can calculate teh remaining items

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 58P: Suppose you begin year 1 with 5000. At the beginning of each year, you put half of your money under...

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A European put option allows an investor to sell a share of stock at the exercise price on the exercise data. For example, if the exercise price is 48, and the stock price is 45 on the exercise date, the investor can sell the stock for 48 and then immediately buy it back (that is, cover his position) for 45, making 3 profit. But if the stock price on the exercise date is greater than the exercise price, the option is worthless at that date. So for a put, the investor is hoping that the price of the stock decreases. Using the same parameters as in Example 11.7, find a fair price for a European put option. (Note: As discussed in the text, an actual put option is usually for 100 shares.)
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Suppose you begin year 1 with 5000. At the beginning of each year, you put half of your money under a mattress and invest the other half in Whitewater stock. During each year, there is a 40% chance that the Whitewater stock will double, and there is a 60% chance that you will lose half of your investment. To illustrate, if the stock doubles during the first year, you will have 3750 under the mattress and 3750 invested in Whitewater during year 2. You want to estimate your annual return over a 30-year period. If you end with F dollars, your annual return is (F/5000)1/30 1. For example, if you end with 100,000, your annual return is 201/30 1 = 0.105, or 10.5%. Run 1000 replications of an appropriate simulation. Based on the results, you can be 95% certain that your annual return will be between which two values?
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Based on Grossman and Hart (1983). A salesperson for Fuller Brush has three options: (1) quit, (2) put forth a low level of effort, or (3) put forth a high level of effort. Suppose for simplicity that each salesperson will sell 0, 5000, or 50,000 worth of brushes. The probability of each sales amount depends on the effort level as described in the file P07_71.xlsx. If a salesperson is paid w dollars, he or she regards this as a benefit of w1/2 units. In addition, low effort costs the salesperson 0 benefit units, whereas high effort costs 50 benefit units. If a salesperson were to quit Fuller and work elsewhere, he or she could earn a benefit of 20 units. Fuller wants all salespeople to put forth a high level of effort. The question is how to minimize the cost of encouraging them to do so. The company cannot observe the level of effort put forth by a salesperson, but it can observe the size of his or her sales. Thus, the wage paid to the salesperson is completely determined by the size of the sale. This means that Fuller must determine w0, the wage paid for sales of 0; w5000, the wage paid for sales of 5000; and w50,000, the wage paid for sales of 50,000. These wages must be set so that the salespeople value the expected benefit from high effort more than quitting and more than low effort. Determine how to minimize the expected cost of ensuring that all salespeople put forth high effort. (This problem is an example of agency theory.)
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Suppose you are going to receive $20,000 per year forfive years. The appropriate interest rate is 7 percent.a. What is the present value of the payments if they are in the form of an ordinaryannuity? What is the present value if the payments are an annuity due?b. Suppose you plan to invest the payments for five years. What is the future valueif the payments are an ordinary annuity? What if the payments are an annuitydue?c. Which has the highest present value, the ordinary annuity or annuity due? Whichhas the highest future value? Will this always be true?
An investor has a certain amount of money available to invest now. Three alternative investmentsare available. The estimated profit in Kwacha of each investment under each economic conditionare indicated in the following payoff table:Event Investment SelectionA B CEconomy declines 500 -2000 -7000No charge 1000 2000 -1000Economy Expand 2000 5000 20,000Based on his own past experience, the investor assigns the following probabilities to eacheconomic condition:( )( )( )Economy declines 0.30No change 0.50Economy expands 0.20PPP===i. Determine the optimal action based on the maximax criterion ii. Determine the optimal action based on the maximin criterion iii. Compute the expected monetary value (EMV) for each investment iv. Compute the expected opportunity loss (EOL) for each investment v. Explain the meaning of the expected value of perfect information (EVPI) in thisproblem vi. Based on the results of (iii) and (iv), which investment would you choose?vii. Compute the coefficient of…
Bilbo Baggins wants to save money to meet threeobjectives. First, he would like to be able to retire 30 years from now with a retirementincome of $23,000 per month for 20 years, with the first payment received 30 yearsand 1 month from now. Second, he would like to purchase a cabin in Rivendell in10 years at an estimated cost of $320,000. Third, after he passes on at the end of the20 years of withdrawals, he would like to leave an inheritance of $1,000,000 to hisnephew Frodo. He can afford to save $2,100 per month for the next 10 years. If hecan earn an 11 percent EAR before he retires and an 8 percent EAR after he retires,how much will he have to save each month in Years 11 through 30?
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