Question
At the beginning of year 1, you have $100,000. Investments A and B are available; their cash flows are shown in the file P04_62.xlsx. Assume
At the beginning of year 1, you have $100,000. Investments A and B are available; their cash flows are shown in the file P04_62.xlsx. Assume that any money not invested in A or B earns interest at an annual rate of 2.5%.
a. Determine how to maximize your cash on hand in year 4.
You can maximize cash on hand in year 4 to $ , by investing $ in A and $ in B.
b. Use SolverTable to determine how a change in the year 3 yield for investment A changes the optimal solution to the problem. Round your answer to the nearest cent.
Except when this return is SelectlowergreaterItem 4 than $ , the same split continues to be optimal.
c. Use SolverTable to determine how a change in the year 4 yield of investment B changes the optimal solution to the problem. Round your answer to the nearest cent.
Except when this return is SelectlowergreaterItem 6 than $ , the same split continues to be optimal.
Data:
Font Alignme Clipboard -1 4 x fx Investment data A B D E F G H Investmenldata B Year 1 A -$1.00 $0.50 $0.80 $0.20 AWN $0.00 $1.00 $0.80 $0.70 Negative means an outflow; positive means an inflow. All flows at the beginnings of their respective yearsStep by Step Solution
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