Question
A financial analyst at Diehl investments identified two companies that want to take over in the near future. Net Wide Systems (NWS) and Information Capital
A financial analyst at Diehl investments identified two companies that want to take over in the near future. Net Wide Systems (NWS) and Information Capital T (ICT). NWS is trading for $60 per share and ICT is currently trading for $35 per share. If the takeovers occur, the analyst estimates that the price of NWS will go to $75 per share and ICT will go to $55 per share. At this point in time, the analyst identified ICT as a higher risk alternative. Assume that a client who indicated a willingness to invest a maximum of $60,000 in the two companies wants to invest at least $20,000 in NWS and at least $15,000 in ICT. Because of the higher risk associated with CTS, the analyst recommends that at most $30,000 should be invested in ICT.
a. Formulate a linear programming model that maximizes the total return for the investment.
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