Type of investment annual rate of return

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Reference no: EM131314471

Investment Problem

1) A credit union wants to make investments in the following:

Type of Investment Annual Rate of Return (%)

Vehicle loans 6

Consumer loans 12

Other secured loans 5

Signature loans 8

Risk-free securities 4

The firm will have $2,000,000 available for investment during the coming year. Answer the following questions:

* Clearly define decision variables below.

* Write the objective function that is to maximize total annual return.

* Write the constraint that indicates the firm should invest up to $2,000,000

* Write the constraint that indicates Risk free securities may not exceed 30% of the total funds, but must comprise at least 5% of the total.

Hint: there two constrains in this statement.

* Write the constraint that indicates Signature loans may not exceed 12% of the funds

invested in all loans (vehicle, consumer, other secured loans, and signature loans)

* Write the constraint that indicates Consumer loans plus other secured loans may not exceed the vehicle loans

* Write the constraint that indicates other secured loans plus signature loans may not exceed the funds invested in risk free securities.

* To solve this problem we should:

Maximize

Subjected to:

*After solving this problem with Excel or QM write your answers that includes the value of the objective function, and all decision variables below.

Reference no: EM131314471

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