The Cassidy Foundation is a non-profit organization to aid the homeless. The foundation has NEW assets totalling $5 million to add to OLD assets of $5 million. The Directors of the endowment anticipates a spending rate of 5%. Inflation is expected to be 3% annually. Calculate the return objective State the fund’s risk tolerance

The Cassidy Foundation is a non-profit organization to aid the homeless. The foundation has NEW assets totalling $5 million to add to OLD assets of $5 million. The Directors of the endowment anticipates a spending rate of 5%. Inflation is expected to be 3% annually. Calculate the return objective State the fund’s risk tolerance

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter11: Linear Optimization Models

Section: Chapter Questions

Problem 11P: The employee credit union at State University is planning the allocation of funds for the coming...

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The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 8 Furniture loans 10 Other secured loans 11 Signature loans 12 Risk-free securities 9 The credit union will have $2 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments: Risk-free securities may not exceed 30% of the total funds…
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