Question
NEED EXCEL SOLUTION!! In a similar layout as what I have attached Kathleen Allen, an individual investor, has $70,000 to divide among several investments. The
NEED EXCEL SOLUTION!! In a similar layout as what I have attached
Kathleen Allen, an individual investor, has $70,000 to divide among several investments. The alternative investments are municipal bonds with an 8.5% annual return, certificates of deposit with a 5% return, treasury bills with a 6.5% return, and a growth stock fund with a 13% annual return. The investments are all evaluated after 1 year. However, each investment alternative has a different perceived risk to the investor; thus, it is advisable to diversify. The following guidelines have been established for diversifying the investments and lessening the risk perceived by the investor: No more than 20% of the total investment should be in municipal bonds. The amount invested in certificates of deposit should not exceed the amount invested in the other three alternatives. At least 30% of the investment should be in treasury bills and certificates of deposit. To be safe, more should be invested in CDs and treasury bills than in municipal bonds and the growth stock fund, by a ratio of at least 1.2 to 1. Set up a Solver model develop an optimal solution that maximizes return on investment.
Portfolio Selection International City Trust (ICT) Investment Municipal Bonds CDs Treasury Bills Growth Stock Fund Return Investment Limit $14,000.00 $10,500.00 $10,500.00 $35,000.00 8.5% 5.0% 6.5% 13.0% Total investment limit $70,000.00 Required Minimum Investment Treasury Bills CDs Investment Municipal Bonds CDs Treasury Bills Growth Stock Fund Total invested Investment Limit $14,000.00 $10,500.00 $10,500.00 $35,000.00 Amount 0 Required Minimum Investment Constraints Municipal Bonds Treasury Bills+CDs Actual 0 0 Minimum 0 $0.00 Set Objective Cell Total return Portfolio Selection International City Trust (ICT) Investment Municipal Bonds CDs Treasury Bills Growth Stock Fund Return Investment Limit $14,000.00 $10,500.00 $10,500.00 $35,000.00 8.5% 5.0% 6.5% 13.0% Total investment limit $70,000.00 Required Minimum Investment Treasury Bills CDs Investment Municipal Bonds CDs Treasury Bills Growth Stock Fund Total invested Investment Limit $14,000.00 $10,500.00 $10,500.00 $35,000.00 Amount 0 Required Minimum Investment Constraints Municipal Bonds Treasury Bills+CDs Actual 0 0 Minimum 0 $0.00 Set Objective Cell Total returnStep by Step Solution
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