Question
An investor has $100,000 to invest right now (the beginning of year 1). The cash flows associated with five available investments are shown in the
An investor has $100,000 to invest right now (the beginning of year 1). The cash flows associated with five available investments are shown in the attachment. For example, every dollar invested in A in year 1 yields $1.40 in year 4. In addition to these investments, the investor can invest as much money each year as he wants in CDs, which pay 3% interest. The investor wants to maximize his available cash in year 4. Assuming that he can put no more than $50,000 in any investment, develop an LP model in xcel to help the investor achieve his goal.
a. How the investor maximize his available cash in year 4.
b. How the interest rate affects the investors' maximum available cash in year 4 and his investment decisions.
c. How the interest rate and the cash allowed for each investment jointly affect the investors maximum available cash in year 4 and his investment decisions.
Data on investments Year of investment Year of return Return CD interest rate Max amt per investment Initial amount to invest Invest A Invest B Invest C Invest D Invest E 1.4 1.15 1.28 1.15 1.32 3%. $50,000 $100,000Step by Step Solution
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