GIVEN INFORMATION

Annual Rate of Return (%)

Home Mortgage (first) = 12%

Home Mortgage (second) = 13%

Commercial Loan= 16%

Auto Loan= 16%

Home Improvement Loan= 19%

Risk Free Security= 11.5%

The bank's objective is to maximize the annual rate of return on investments subject to the following policies, restrictions, and regulations:

1. The bank has $780 million in available funds.
2. Risk-free securities must contain at least 10% of the total funds available for investments.
3. Home improvement loans cannot exceed $90,000,000.
4. The investment in first and second mortgage loans must be at least 60 percent of all the funds invested in the 5 loan types.
5. The investment in the first mortgage loans must be at least three times the funds invested in second mortgage loans.
6. Home improvement loans cannot exceed 15 percent of the funds invested in first mortgage loans.
7. Automotive loans and home improvement loans together may not exceed the commercial loans.
8. Commercial loans cannot exceed 60% of the total funds invested in mortgage loans.

QUESTION

Formulate the problem into proper Linear Programming format using Excel Solver