Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question: The employee credit union at State University is p... The employee credit union at State University is planning the allocation of funds for the

Question: The employee credit union at State University is p... The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 10% Furniture loans 12% Other secured loans 8% Signature loans 6% Risk-free securities 7% The credit union will have $2 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. Automobile securities may not exceed 10% of the total funds available for investment Furniture loans may not exceed 20% of the total funds available for investment. Other secured loans should represent 30% of the total amount in loans. the credit union can lend a maximum of 2 million, of which no more than 25% will be of Risk free securities, and at least 400,000 should be invested within signature loans. What is the optimal solution for how the funds should be allocated to maximize the amount in return? If you don't mind showing the Excel Solver using Linear Programming set up that would be great; I am also struggling a bit with the set up. thank you!!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Decentralized Finance How DeFi Is Changing The Future Of Money

Authors: Rhian Lewis

1st Edition

1398609390, 978-1398609396

More Books

Students also viewed these Finance questions

Question

Presentation Aids Practicing Your Speech?

Answered: 1 week ago