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As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of
As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars): annually) and government securities, at prices and rates currently quoted in The Wall Street Journal. Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value =$1000 ). Funds not invested in these securities will be placed in savings. Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to pay a trustee the amount that will be required to fund the plan. a. Use linear programming to find the minimum cash settlement necessary to fund the annual payments. Let F= total funds required to meet the six years of payments G1= units of government security 1 G2= units of government security 2 Si= investment in savings at the beginning of year i Note: All decision variables are expressed in thousands of dollars. If required, round your answers to five decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign Round your answer to the nearest dollar. If an amount is zero, enter "0". $ c. Use the dual value to determine how much more Hoxworth should be willing to pay to reduce the year 1 payment to $150,000. Round your answer to the nearest dollar. Hoxworth should be willing to pay anything less than $ d. Suppose that the annual payments are to be made at the end of each year. Reformulate the model to accommodate this change. Note: All decision variables are expressed in thousands of dollars. If required, round your answers to five decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300 ) As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars): annually) and government securities, at prices and rates currently quoted in The Wall Street Journal. Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value =$1000 ). Funds not invested in these securities will be placed in savings. Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to pay a trustee the amount that will be required to fund the plan. a. Use linear programming to find the minimum cash settlement necessary to fund the annual payments. Let F= total funds required to meet the six years of payments G1= units of government security 1 G2= units of government security 2 Si= investment in savings at the beginning of year i Note: All decision variables are expressed in thousands of dollars. If required, round your answers to five decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign Round your answer to the nearest dollar. If an amount is zero, enter "0". $ c. Use the dual value to determine how much more Hoxworth should be willing to pay to reduce the year 1 payment to $150,000. Round your answer to the nearest dollar. Hoxworth should be willing to pay anything less than $ d. Suppose that the annual payments are to be made at the end of each year. Reformulate the model to accommodate this change. Note: All decision variables are expressed in thousands of dollars. If required, round your answers to five decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300 )
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