Question
I am trying to solve question 3-13 from Managerial Decision with Spreadsheets (Balakrishnan, Render, and Stair). It is stated as: A brokerage firm has been
I am trying to solve question 3-13 from Managerial Decision with Spreadsheets (Balakrishnan, Render, and Stair). It is stated as: A brokerage firm has been tasked with investing $500,000 for a new client. The client has asked that the broker select promising stocks and bonds for investment, subject to the following quidelines
1. At least 20% in municipal bonds;
2. At least 10% each in a real estate and pharmaceutical stock;
3. At least 40% in a combination of energy and domestic automobile stocks, with each accounting for at least 15%;
4. No more than 50% of the total amount invested in energy and automobile stocks in a combination of real estate and pharmaceutical company stock.
Subject to these contraints, the client's goal is to maximize projected return on investments. The broker has prepared a list of high-quality stocks and bonds and their corresponding rates of return, as shown in the following table:
Investment | Annual Rate of Return |
---|---|
City of Miami (municipal) bonds | 5.3% |
American Smart Car | 8.8% |
GreenEarth Energy | 4.9% |
Rosslyn Pharmaceuticals | 8.4% |
RealCo (real estate) | 10.4% |
I have reference the textbook solution for this problem within Chegg, but, when I enter the problem in excel and use Solver, I don't come up with the correct outputs. The answer should be:
Total return=$38,708.33 and investing:
$100,000 in Miami; $191,666.67 in American Smart Car; $75,000 in GreenEarth Energy; $50,000 in Rosslyn Pharmaceuticals; and, $83,333.33 in RealCo.
How would the constraints be listed as? That is where I'm running into an issue, I believe.
Thank you in advance.
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