Question
At the beginning of year 1, you have $10,000. Investments A and B are available; their cash flows are shown in the file (graph below).
At the beginning of year 1, you have $10,000. Investments A and B are available; their cash flows are shown in the file (graph below). Assume that any money not invested in A or B earns interest at an annual rate of 2%.
a. Enter the maximized amount of cash on hand at the beginning of year 4. $
b. Use SolverTable to determine how a change in the year 2 return for investment A, varied from $1.00 to $2.00 in increments of $0.10, changes the optimal solution to the problem.
As the return from A in year 2 increases, ___ 2 is eventually invested in A and ____ 3 in B, and ending cash eventually ____ 4 .
c. Use SolverTable to determine how a change in the year 3 return of investment B, varied from $1.50 to $2.50 in increments of $0.10, changes the optimal solution to the problem.
As the return from B in year 3 increases,_______ 5 is eventually invested in B and __________6 invested in A, and ending cash ____________7 .
Cash flows from investment: | ||
A | B | |
Time 0 | -1 | 0 |
Time 1 | 0.2 | -1 |
Time 2 | 1.5 | 0 |
Time 3 | 0 | 1.9 |
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