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Julia Johnson has been accumulating savings for years to put toward her children's future college educations. She would now like to set up a college-savings
Julia Johnson has been accumulating savings for years to put toward her children's future college educations. She would now like to set up a college-savings fund for her two children. The college-savings fund has two investment options: (1) a bond fund and (2) a stock fund. The projected returns over the life of the investments are 8% for the bond fund and 11% for the stock fund. Whatever portion of her accumulated savings that she finally decides to commit to the college-savings fund, she wants to invest at least 30% of that amount in the bond fund. In addition, she wants to select a mix that will enable her to obtain a total return of at least 9%. (a) Formulate a linear programming model that can be used to determine the percentage (as a decimal) that should be allocated to each of the possible investment alternatives. (Assume B is the percentage (as a decimal) of funds invested in the bond fund and S is the percentage (as a decimal) of funds invested in the stock fund.) Max (as a decimal) s.t. bond minimum fund minimum return percentage requirement B,S0 (b) Solve the problem using the graphical solution procedure. What is the value of the objective function at the optimal solution? at(B,S)=()
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