Question
Please explain how to complete this in excel Clearlake Savings Bank (CSB) invested $1 million in new funds that must be distributed to customers via
Please explain how to complete this in excel
Clearlake Savings Bank (CSB) invested $1 million in new funds that must be distributed to customers via home loans, personal loans, and automobile loans in attempt to maximize the annual return (i.e., total interest income made from the loans) generated. The annual rates of return for the three types of loans are: 7% for home loans, 12% for personal loans, and 9% for automobile loans. The banks planning committee has put the following restrictions in place regarding distribution of the loans: At least 40% of the new funds must be allocated to home loans. The amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans. a. Create a spreadsheet model with three decision variables: i. the dollar amount to be distributed via home loans. ii. the dollar amount to be distributed via personal loans. iii. the dollar amount to be distributed via automobile loans. Be sure to organize your spreadsheet so that it would be easy to read by a third party, using clear labels and formatting. b. Using linear programming via Excels Solver functionality and your spreadsheet model, prepare a report that shows the amount of funds CSB should allocate to each type of loan to maximize the total annual return for the new funds. On the report, highlight in yellow how much should be allocated to each type of loan. On the report, highlight in blue the total annual return and the annual percentage return, assuming the specified amounts are invested. c. Using Excels Solver functionality and your spreadsheet model, prepare a Sensitivity report as well. Looking at this report, answer the following questions in a textbook below the report: i. If the interest rate on home loans increases to 9%, would the amount distributed to each type of loan change? Briefly explain the rationale for your response. ii. Suppose the total amount of new funds available is increased by $10,000 (new total $1,010,000). What effect would this have on the total annual return? Briefly explain the rationale for your response.
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