A credit union wants to make investments in the following: Type of Investment Vehicle loans Consumer...

   

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A credit union wants to make investments in the following: Type of Investment Vehicle loans Consumer loans Other secured loans Signature loans Risk-free securities Annual Rate of Return (%) 7 9 10 11 8 The firm will have $2,500,000 available for investment during the coming year. The following restrictions apply: • Risk-free securities may not exceed 30% of the total funds . Other secured loans plus risk-free securities may not exceed the funds invested in signature loans. • All $2,500,000 should be invested X₁ - amount (S) invested in vehicle loans X2 - amount (S) invested in consumer loans X3 - amount (S) invested in other secured loans. X4 amount (S) invested in signature loans X5 = amount (S) invested in risk-free loans Formulate a model and solve it using computer. How should the $2,500,000 be allocated to each alternative to maximize annual return? What is the annual return? A credit union wants to make investments in the following: Type of Investment Vehicle loans Consumer loans Other secured loans Signature loans Risk-free securities Annual Rate of Return (%) 7 9 10 11 8 The firm will have $2,500,000 available for investment during the coming year. The following restrictions apply: • Risk-free securities may not exceed 30% of the total funds . Other secured loans plus risk-free securities may not exceed the funds invested in signature loans. • All $2,500,000 should be invested X₁ - amount (S) invested in vehicle loans X2 - amount (S) invested in consumer loans X3 - amount (S) invested in other secured loans. X4 amount (S) invested in signature loans X5 = amount (S) invested in risk-free loans Formulate a model and solve it using computer. How should the $2,500,000 be allocated to each alternative to maximize annual return? What is the annual return?

Answer rating: 100% (QA)

This problem can be solved using the the concept Linear Progamming Problem The objective function in ... View the full answer