SOLVE IT USING EXCEL DATA SOLVER LINEAR PROGRAMMING AND WRITE DOWN CONSTRAINTS
Problem 10 An investment firm has 150000 to invest in stocks, bonds, certificates of deposit, and real estate. The firm wishes to determine the mix of investments that will maximise the cash value at the end of six years. Opportunities to invest in stocks and bonds will be available at the beginning of each of the next six years. Each pound invested in stocks will return 1.25 ( a profit of 0.25) two years later, the return can be immediately reinvested in any alternative. Each pound invested in bonds will return 1.4 three years later; the return can be immediately reinvested in any alternative. Opportunities to invest in certificates of deposit will be available only once, at the beginning of the second year. Each pound invested in certificates will return 1.85 four yeas later, the return can be immediately reinvested in any alternative. Opportunities to invest in real estate will be available at the beginning of forth and sixth years. Each pound invested will return 1.35 one year later, the return can be immediately reinvested in any alternative. To minimise risk, the firm has decided to diversify its investments. The total amount invested in stocks can not exceed 75000, the total amount invested in real estate should be at least 15000, and the total amount invested in bonds should be at least 30000. What is the maximal cash value (initial sum plus profit) that the firm can get at the end of the six years period (i.e. at the beginning of seventh year)? Problem 10 An investment firm has 150000 to invest in stocks, bonds, certificates of deposit, and real estate. The firm wishes to determine the mix of investments that will maximise the cash value at the end of six years. Opportunities to invest in stocks and bonds will be available at the beginning of each of the next six years. Each pound invested in stocks will return 1.25 ( a profit of 0.25) two years later, the return can be immediately reinvested in any alternative. Each pound invested in bonds will return 1.4 three years later; the return can be immediately reinvested in any alternative. Opportunities to invest in certificates of deposit will be available only once, at the beginning of the second year. Each pound invested in certificates will return 1.85 four yeas later, the return can be immediately reinvested in any alternative. Opportunities to invest in real estate will be available at the beginning of forth and sixth years. Each pound invested will return 1.35 one year later, the return can be immediately reinvested in any alternative. To minimise risk, the firm has decided to diversify its investments. The total amount invested in stocks can not exceed 75000, the total amount invested in real estate should be at least 15000, and the total amount invested in bonds should be at least 30000. What is the maximal cash value (initial sum plus profit) that the firm can get at the end of the six years period (i.e. at the beginning of seventh year)
