Jack Potts recently won $1,000,000 in Las Vegas and is trying to determine how to invest his winnings. He has narrowed his decision down to five investments, which are summarized in the following table.

If Jack invests $1 in investment A at the beginning of year 1, he will receive $0.50 at the beginning of year 2 and another $0.80 at the beginning of year 3. Alternatively, he can invest $1 in investment B at the beginning of year 2 and receive $1.25 at the beginning of year 4. Entries of “←→” in the table indicate times when no cash inflows or outflows can occur. At the beginning of any year, Jack can place money in a money market account that is expected to yield 8% per year. He wants to keep at least $50,000 in the money market account at all times and doesn’t want to place any more than $500,000 in any single investment. How would you advise Jack to invest his winnings if he wants to maximize the amount of money he’ll have at the beginning of year 4?
a. Formulate an LP model for this problem.
b. Create a spreadsheet model for this problem and solve it using Solver.
c. What is the optimalsolution?

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Summary of Cash Inflows and Outflows at beginning of years) 3 4 0.50 0.80 1.25 C-1 ←→ ←-→ 1.35 1.13 E 1 1.27