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Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual
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 6% for home loans, 10% for personal loans, and 11% for automobile loans. The bank's planning committee has decided 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 Max H + P + A s.t. H + P+ A Minimum Home Loans H + P + A Personal Loan Requirement H + P + A = Amount of New Funds (b) How much should be allocated to each type of loan? Loan type Home Allocation Personal Automobile What is the total annual return? If required, round your answer to nearest whole dollar amount. $ What is the annual percentage return? If required, round your answer to two decimal places. % (c) If the interest rate on home loans increases to 9%, would the amount allocated to each type of loan change? Select your answer
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a The linear programming model can be formulated as follows Maximize H P A Subject to H P A 1...Get Instant Access to Expert-Tailored Solutions
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