Read the following scenario and then answer the essay questions listed below to complete the exercise.

Scenario

Your corporation has just approved an 8-year expansion plan to grow its market 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 needed for the expansion will be available at the beginning of each of the 8 years.

The corporation has the following investment options:

Security

Price per unit

Return Rate (%)

Years to Maturity

1

$1,200

10.255

5

2

$1,000

6.7550

6

3

$1,175

12.110

7

Savings Account

5.500

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 of year 1 and will be held until maturity. Any funds not invested in securities will be invested in a savings account that pays the annual interest rates noted above.

The following table summarizes the cash needs for the expansion plan for each of the 8 years:

Year 1 = $250,000

Year 5 = $295,000

Year 2 = $300,000

Year 6 = $310,000

Year 3 = $225,000

Year 7 = $280,000

Year 4 = $235,000

Year 8 = $305,000

You will use the Lesson 5 Exercise Template to answer the essay questions. Your assignment must address all relevant parts of each question. Make sure to cite any references you use, including the textbook in APA format. The essay should be in APA format, double-spaced, and should include the following as listed in the template:

A Cover Page (List your name, your instructor's name, the course number and title, the assignment title, and the date of submission.)

Introduction (Explain what your essay paper is about in 1 to 2 paragraphs.)

Body (Answer the essay questions below in this section, and show all of your calculations including related screen prints of your Excel models.) Note: Include your Excel screen prints in the Word template.

Conclusion (Explain what your essay paper covered, and write a self-reflection paragraph: What did you learn from completing this assignment?)

References (Include all references used, even if only the textbook was used. Proper citation format for a reference includes the name of the author(s), the title of the work, the date of the publication, and the page number.)

Appendices (Not required, include only if you feel it is necessary to add appendices for clarity of your analysis.)

Essay Questions

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.

Name: Read the following scenario and then answer the essay questions listed
Uploaded: 2024-03-20T07:07:26.000Z
Channel: Bartleby
Description: Read the following scenario and then answer the essay questions listed below to complete the exercise.ScenarioYour corporation has just approved an 8-year expansion plan to grow its market share. The plan requires an influx of cash in each of the 8 y

Question

Read the following scenario and then answer the essay questions listed below to complete the exercise.

Scenario

Your corporation has just approved an 8-year expansion plan to grow its market 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 needed for the expansion will be available at the beginning of each of the 8 years.

The corporation has the following investment options:

Security	Price per unit	Return Rate (%)	Years to Maturity
1	$1,200	10.255	5
2	$1,000	6.7550	6
3	$1,175	12.110	7
Savings Account		5.500

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 of year 1 and will be held until maturity. Any funds not invested in securities will be invested in a savings account that pays the annual interest rates noted above.

The following table summarizes the cash needs for the expansion plan for each of the 8 years:

Year 1 = $250,000	Year 5 = $295,000
Year 2 = $300,000	Year 6 = $310,000
Year 3 = $225,000	Year 7 = $280,000
Year 4 = $235,000	Year 8 = $305,000

You will use the Lesson 5 Exercise Template to answer the essay questions. Your assignment must address all relevant parts of each question. Make sure to cite any references you use, including the textbook in APA format. The essay should be in APA format, double-spaced, and should include the following as listed in the template:

A Cover Page (List your name, your instructor's name, the course number and title, the assignment title, and the date of submission.)
Introduction (Explain what your essay paper is about in 1 to 2 paragraphs.)
Body (Answer the essay questions below in this section, and show all of your calculations including related screen prints of your Excel models.) Note: Include your Excel screen prints in the Word template.
Conclusion (Explain what your essay paper covered, and write a self-reflection paragraph: What did you learn from completing this assignment?)
References (Include all references used, even if only the textbook was used. Proper citation format for a reference includes the name of the author(s), the title of the work, the date of the publication, and the page number.)
Appendices (Not required, include only if you feel it is necessary to add appendices for clarity of your analysis.)

Essay Questions

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.

Accepted Answer

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