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Francois and Camille Merrit recently inherited a substantial amount of money from a deceased relative. They want to use part of this money to establish
Francois and Camille Merrit recently inherited a substantial amount of money from a deceased relative. They want to use part of this money to establish an account to pay for their daughters college education. Their daughter, Lisa, will be starting college five years from now. The Merrits estimate that her first year college expenses will amount to $ and increase $ per year during each of the remaining three years of her education. The following investments are available to the Merrits:
Investment Available Matures Return at Maturity
A every year year
B years
C years
D years
The Merrits want to determine an investment plan that will provide the necessary funds to cover Lisas anticipated college expenses with the smallest initial investment.
a Formulate an LP model for this problem.
b Create a spreadsheet model for this problem and solve it using Solver.
c What is the optimal solution?
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