Imagine that you work as a financial advisor. You have a client who would like to invest $750,000 in bonds. You have narrowed down your options to the following list: Company Acme Chemical DynaStar Eagle Vision Micromodeling OptiPro Sabre Systems Interest Rate Years to Maturity Rating 8,65% 11 1 - Excellent 9.50% 10 3 - Good 10.00% 6 4 - Fair 8.75% 10 1 - Excellent 9.25% 7 3 - Good 9.00% 13 2. Very Good The interest rate describes the return of the investment as the simple interest earned over the length of the bond's life. That is, if $100 is invested in Acme Chemical, the return at the end of the 11 years will be PV :r = 100 -0.0865 = $8.65 1. No more than 25% of the total funds should be invested in any one investment 2. At least half should be invested in long-term bonds that mature in ten years or more. 3. No more than 35% of the total funds should be invested in the combination of Dynastar, Eagle Vision, and Optipro And the last stipulation is that all $750,000 must be invested. If the goal is to maximize your client's total return on the investment, how much should they invest in each of the six bonds? What is the corresponding maximum total return they can expect to receive? 5. (6 points) Fill out the Excel sheet and use it to set up Solver. After running Solver and obtaining the solution, upload your Excel sheet to the dropbox on D2L. 6. (3 points) State the optimal solution and corresponding optimal value of the objective function found by Solver. Imagine that you work as a financial advisor. You have a client who would like to invest $750,000 in bonds. You have narrowed down your options to the following list: Company Acme Chemical DynaStar Eagle Vision Micromodeling OptiPro Sabre Systems Interest Rate Years to Maturity Rating 8,65% 11 1 - Excellent 9.50% 10 3 - Good 10.00% 6 4 - Fair 8.75% 10 1 - Excellent 9.25% 7 3 - Good 9.00% 13 2. Very Good The interest rate describes the return of the investment as the simple interest earned over the length of the bond's life. That is, if $100 is invested in Acme Chemical, the return at the end of the 11 years will be PV :r = 100 -0.0865 = $8.65 1. No more than 25% of the total funds should be invested in any one investment 2. At least half should be invested in long-term bonds that mature in ten years or more. 3. No more than 35% of the total funds should be invested in the combination of Dynastar, Eagle Vision, and Optipro And the last stipulation is that all $750,000 must be invested. If the goal is to maximize your client's total return on the investment, how much should they invest in each of the six bonds? What is the corresponding maximum total return they can expect to receive? 5. (6 points) Fill out the Excel sheet and use it to set up Solver. After running Solver and obtaining the solution, upload your Excel sheet to the dropbox on D2L. 6. (3 points) State the optimal solution and corresponding optimal value of the objective function found by Solver
