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:
The credit union will have $2 million available for investment during the coming year. State laws are 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 available for investment.
- Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans).
- Furniture loans plus other secured loans may not exceed the automobile loans.
- Other secured loans plus signature loans may not exceed the funds invested in risk-free securities.
How should the $2 million be allocated to each of the loan/investment alternatives to maximize total annual return? What is the projected total annual return?
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Chapter 11 Solutions
Essentials of Business Analytics (MindTap Course List)
- In which section of the statement of cash flows would each of the following transactions be included? For each, identify the appropriate section of the statement of cash flows as operating (O), investing (I), financing (F), or none (N). (Note: some transactions might involve two sections.) purchased stock in Xerox Corporation purchased office supplies issued common stock sold plant assets for cash sold equipment for casharrow_forwardStarting in 2010, on the heels of the 2007-2009 subprime mortgage crisis, the United States saw an epidemic of mortgage foreclosures, often initiated improperly by large financial institutions. This question is based on the following table, which shows the numbers of foreclosures in three states during three months of 2011. June July August California 54,100 56,200 59,400 Florida 23,800 22,400 23,600 Texas 9,300 10,600 10,100 Your law firm handled 30% of all forclosures in each state in june, 10% of all foreclosures in July, and 40% of all foreclosures in August 2011. Use matrix multiplication to compute the total number of foreclosures handled by your firm in each of the states shown. Total California Florida Texasarrow_forwardInvesting activities include all of the following except loans made to others and collected. purchases and sales of another company’s stock. issuing and repaying debt. purchases and sales of property and equipment.arrow_forward
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- In recent years major efforts have been made to standardize accounting practices in different countries; this is called harmonization. In an article in Accounting and Business Research, Emmanuel N. Emenyonu and Sidney J. Gray studied the extent to which accounting practices in France, Germany, and the U.K. are harmonized. (a) Depreciation method is one of the accounting practices studied by Emenyonu and Gray. Three methods were considered—the straight-line method (S), the declining balance method (D), and a combination of D & S(sometimes European firms start with the declining balance method and then switch over to the straight-line method when the figure derived from straight line exceeds that from declining balance). The data in the table (below) summarize the depreciation methods used by a sample of 78 French, German, and U.K. firms. Depreciation Methods France Germany UK Total A. Straight line (S) 15 0 25 40 B. Declining Bal (D) 1 1 1 3 C. (D & S) 10 25…arrow_forwardIn recent years major efforts have been made to standardize accounting practices in different countries; this is called harmonization. In an article in Accounting and Business Research, Emmanuel N. Emenyonu and Sidney J. Gray studied the extent to which accounting practices in France, Germany, and the U.K. are harmonized. (a) Depreciation method is one of the accounting practices studied by Emenyonu and Gray. Three methods were considered—the straight-line method (S), the declining balance method (D), and a combination of D & S(sometimes European firms start with the declining balance method and then switch over to the straight-line method when the figure derived from straight line exceeds that from declining balance). The data in the table (below) summarize the depreciation methods used by a sample of 78 French, German, and U.K. firms. Depreciation Methods France Germany UK Total A. Straight line (S) 15 0 25 40 B. Declining Bal (D) 1 1 1 3 C. (D & S) 10 25…arrow_forwardInvesting: Lesser-Known Stocks The following question is based on the following information about the stocks of Whitestone REIT, HCC Insurance Holdings, Inc., and SanDisk Corporation. Price($) Dividend Yield(%) WSR(WSR Whitestone REIT) 16 7 HCC(HCC Insurance Holdings, Inc.) 56 2 SNDK(SanDisk Corporation) 80 2 You invested a total of $12,400 in shares of the three stocks at the given prices, and expected to earn $328 in annual dividends. If you purchased a total of 250 shares, how many shares of each stock did you purchase? WSR = shares HCC = shares SNDK = sharesarrow_forward
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