Mr BE Rich plans a big business deal at the end of a period of $5$ years from now. For this purpose he

needs to accumulate as much money as possible. He is considering the following three investment

schemes in which to invest over this period of $5$ years.

Scheme A: Available on the first day of each year and yielding $15\%$ return at the end of two

years.

Scheme B: Available at the beginning of the second year only and yielding $32\%$ return at the end

of the fifth year. The maximum amount that can be invested in this scheme is R$40000.$

Scheme C: One year government bonds, available on the first day of each year and yielding $6\%$

return at the end of the year.

BE Rich has R$100000$ available for investment now. He requires that at least $40\%$ of the total

amount of money in investment each year must be in government bonds.

Assume that an investment is made on the first day of the year in which it is available and is

withdrawn together with its return on the last day of its investment period.

Formulate BE Rich$’$s problem as an LP mode

Answer rating: 100% (QA)

ANSWER Mr BE Rich faces a critical investment decision to accumulate as much money as possible over ... View the full answer