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please give detailed information on the total amount of investment x1 + x2 + x3 + x4 + x = 1, where x), X2, X3,
please give detailed information
on the total amount of investment x1 + x2 + x3 + x4 + x = 1, where x), X2, X3, XA, Xs, each 2 0. f16 EXAMPLE 2.6-24 (Investment Problem) Mr. Krishnamurty, a retired Govt. officer, has recently received his retirement benefits, viz., provident fund, gratuity, etc. He is contemplating as to how much funds he should invest in various alternatives open to him so as to maximize return on investment. The investment alternatives are: government securities, fixed deposits of a public limited company, equity shares, time deposits in banks, national saving certificates and real estate. He has made a subjective estimate of the risk involved. The data on the return on investment, the number of years for which the funds will be blocked to earn this return on investment and the subjective risk involved are as follows: Investment alternatives Return No. of years Risk Govt. securities 6% 15 1 Company deposits 15% 3 3 Equity shares 20% 6 7 Time deposits 10% 3 1 N.S.C. 12% 6 1 Real estate 25% 10 2 He was wondering what percentage of funds he should invest in each alternative so as to maximize the return on investment. He decided that average risk should not be more than 4, and funds should not be locked up for more than 15 years. Formulate an L.P. model for the problem if he does not want more than 30% of the investment to be put in the real estateStep by Step Solution
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