Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Adirondack Savings Bank ( ASB ) has $ 1 million in new funds that must be allocated to home loans, personal loans, and automobile loans.

Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 7% for home loans, 14% for personal loans, and 8% for automobile loans. The bank's planning committee has decided
4. that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans.
(a) Formulate a linear programming model that can be used to determine the amount of funds ASB should allocate to each type of loan to maximize the total annual return for the new funds. If the constant is "1" it must be entered in the box. If your answer is zero enter "0".
Let H= amount allocated to home loans
P= amount allocated to personal loans
A= amount allocated to automobile loans
(b) How much should be allocated to each type of loan?
\table[[Loan type,Allocation],[Home,$
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Databases questions