Al Ferris has $20,000 that he wishes to invest now in order to use the accumulation for purchasing a retirement annuity in five years. After consulting with his financial advisor, he has been offered four types of fixed-income investments, which we will label as investments A, B, C, and D. Investments A and B are available at the beginning of each of the next five years (call them years 1 to 5). Each dollar invested in A at the beginning of a year returns $1.40 (a profit of $0.40) two years later (in time for immediate reinvestment). Each dollar invested in B at the beginning of a year returns $1.70 three years later. Investments C and D will each be available at one time in the future. Each dollar invested in C at the beginning of year 2 returns $1.90 at the end of year 5. Each dollar invested in D at the beginning of year 5 returns $1.30 at the end of year 5.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section9.4: The Precision Tree Add-in
Problem 9P
icon
Related questions
Question

Please calculate dollars invested for each year for each investment, also calculate ending balance at year 5, show answers please as this is due tonight and wanna make sure it is correct.

poking Glass
lomework i
es
Week 4: Modeling 202310 BAD305-US Introd
New Exercise Bank Content Qu. 07-10
Al Ferris has $20,000 that he wishes to invest now in order to use the accumulation for purchasing a retirement annuity in five years.
After consulting with his financial advisor, he has been offered four types of fixed-income investments, which we will label as
investments A, B, C, and D. Investments A and B are available at the beginning of each of the next five years (call them years 1 to 5).
Each dollar invested in A at the beginning of a year returns $1.40 (a profit of $0.40) two years later (in time for immediate
reinvestment). Each dollar invested in B at the beginning of a year returns $1.70 three years later. Investments C and D will each be
available at one time in the future. Each dollar invested in C at the beginning of year 2 returns $1.90 at the end of year 5. Each dollar
invested in D at the beginning of year 5 returns $1.30 at the end of year 5.
Click here for the Excel Data File
Formulate and solve a linear programming model for this problem on a spreadsheet.
a. Which investment plan maximizes the amount of money that can be accumulated by the beginning of year 6?
b. Determine the ending balance at the end of year 5.
Complete this question by entering your answers in the tabs below.
Required A Required B
Dollars invested
Which investment plan maximizes the amount of money that can be accumulated by the beginning of year 6?
Note: Leave no cells blank. Enter zero (0) whenever required.
Year 1
Investment A
Year 3
Year 2
Year 4
€
Year 1
Required A
Investment B
Year 2
Saved
Year 3
Required B
Investment C
Year 2
>
Investment D
Year 5
Transcribed Image Text:poking Glass lomework i es Week 4: Modeling 202310 BAD305-US Introd New Exercise Bank Content Qu. 07-10 Al Ferris has $20,000 that he wishes to invest now in order to use the accumulation for purchasing a retirement annuity in five years. After consulting with his financial advisor, he has been offered four types of fixed-income investments, which we will label as investments A, B, C, and D. Investments A and B are available at the beginning of each of the next five years (call them years 1 to 5). Each dollar invested in A at the beginning of a year returns $1.40 (a profit of $0.40) two years later (in time for immediate reinvestment). Each dollar invested in B at the beginning of a year returns $1.70 three years later. Investments C and D will each be available at one time in the future. Each dollar invested in C at the beginning of year 2 returns $1.90 at the end of year 5. Each dollar invested in D at the beginning of year 5 returns $1.30 at the end of year 5. Click here for the Excel Data File Formulate and solve a linear programming model for this problem on a spreadsheet. a. Which investment plan maximizes the amount of money that can be accumulated by the beginning of year 6? b. Determine the ending balance at the end of year 5. Complete this question by entering your answers in the tabs below. Required A Required B Dollars invested Which investment plan maximizes the amount of money that can be accumulated by the beginning of year 6? Note: Leave no cells blank. Enter zero (0) whenever required. Year 1 Investment A Year 3 Year 2 Year 4 € Year 1 Required A Investment B Year 2 Saved Year 3 Required B Investment C Year 2 > Investment D Year 5
poking Glass
lomework i
es
Week 4: Modeling 202310 BAD305-US Introd
New Exercise Bank Content Qu. 07-10
Al Ferris has $20,000 that he wishes to invest now in order to use the accumulation for purchasing a retirement annuity in five years.
After consulting with his financial advisor, he has been offered four types of fixed-income investments, which we will label as
investments A, B, C, and D. Investments A and B are available at the beginning of each of the next five years (call them years 1 to 5).
Each dollar invested in A at the beginning of a year returns $1.40 (a profit of $0.40) two years later (in time for immediate
reinvestment). Each dollar invested in B at the beginning of a year returns $1.70 three years later. Investments C and D will each be
available at one time in the future. Each dollar invested in C at the beginning of year 2 returns $1.90 at the end of year 5. Each dollar
invested in D at the beginning of year 5 returns $1.30 at the end of year 5.
Click here for the Excel Data File
Formulate and solve a linear programming model for this problem on a spreadsheet.
a. Which investment plan maximizes the amount of money that can be accumulated by the beginning of year 6?
b. Determine the ending balance at the end of year 5.
Complete this question by entering your answers in the tabs below.
Required A Required B
Dollars invested
Which investment plan maximizes the amount of money that can be accumulated by the beginning of year 6?
Note: Leave no cells blank. Enter zero (0) whenever required.
Year 1
Investment A
Year 3
Year 2
Year 4
€
Year 1
Required A
Investment B
Year 2
Saved
Year 3
Required B
Investment C
Year 2
>
Investment D
Year 5
Transcribed Image Text:poking Glass lomework i es Week 4: Modeling 202310 BAD305-US Introd New Exercise Bank Content Qu. 07-10 Al Ferris has $20,000 that he wishes to invest now in order to use the accumulation for purchasing a retirement annuity in five years. After consulting with his financial advisor, he has been offered four types of fixed-income investments, which we will label as investments A, B, C, and D. Investments A and B are available at the beginning of each of the next five years (call them years 1 to 5). Each dollar invested in A at the beginning of a year returns $1.40 (a profit of $0.40) two years later (in time for immediate reinvestment). Each dollar invested in B at the beginning of a year returns $1.70 three years later. Investments C and D will each be available at one time in the future. Each dollar invested in C at the beginning of year 2 returns $1.90 at the end of year 5. Each dollar invested in D at the beginning of year 5 returns $1.30 at the end of year 5. Click here for the Excel Data File Formulate and solve a linear programming model for this problem on a spreadsheet. a. Which investment plan maximizes the amount of money that can be accumulated by the beginning of year 6? b. Determine the ending balance at the end of year 5. Complete this question by entering your answers in the tabs below. Required A Required B Dollars invested Which investment plan maximizes the amount of money that can be accumulated by the beginning of year 6? Note: Leave no cells blank. Enter zero (0) whenever required. Year 1 Investment A Year 3 Year 2 Year 4 € Year 1 Required A Investment B Year 2 Saved Year 3 Required B Investment C Year 2 > Investment D Year 5
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 6 images

Blurred answer
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,