Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Adirondack Savings Bank (ASD) has 51 min in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates

image text in transcribed
image text in transcribed
Adirondack Savings Bank (ASD) has 51 min in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are for home loans, 11 for personal loans, and 7% for automobile loans. The bank's planning committee has decided that at least 40% of the new funds must be allocated to home Joans. In addition, the planning committee has specified that the amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans (a) Formulate a linear programming model that can be used to determine the amount of funds AS should allocate to each type of loan to maximize the total annoul return for the new funds. If the constant is it must be entered in the box. If your answer is zero antero Let amount allocated to home loans Pamount allocated to personal loans A amount allocated to automobile loans Max A H+ Minimum Home Loans H+ P+ Personal Loan Requirement Amount of New Funds (b) How much should be located to each type of loan? Loan type Allocation Home Personal Automobile What is the total annual return? It required, round your answer to nearest whole dollar amount What is the annual percentage of required, round your answer to two decimal places (c) te interest rate on Home Loans increases to 0%, would the amount stocated to each type of loan change Select your answer Explain The input in the box below wil not be grated, but may bewed and considered to your instructor Blank (c) if the interest rate on home loans increases to 9%, would the amount allocated to each type of loan change? Select your answer Explain The input in the box below will not be graded, but may be reviewed and considered by your instructor. blank (d) Suppose the total amount of new funds available is increased by $10,000. What effect would this hove on the total annual return? Explain If required, round your answer to nearest whole dollar amount. An increase of $10,000 to the total amount of funds available would increase the total annual return by (C) Assume that ASB has the originat $1 million in new funds available and that the planning committee has agreed to relax the requirement that at least 40w of the new funds must be allocated to home loans by 1% How much would the annual return change? If required, round your answer to nearest whole dollar amount 5 How much would the annual percentage return change? It required, round your answer to two decimal places Study

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

Personal Finance

Authors: E Thomas Garman, Raymond Forgue

11th Edition

1111531013, 9781111531010

More Books

Students also viewed these Finance questions

Question

2. In what way can we say that method affects the result we get?

Answered: 1 week ago