As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars): 1 1 2 3 Payment 170 210 250 Year The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 3.25% annually) and government securities, at prices and rates currently quoted in The Wall Street Journal. Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value- $1000). Funds not invested in these securities will be placed in savings. Security Current Price Rate (%) Years to Maturity 1 3 2 Let $1075 $1000 456 310 340 500 Min st. Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Haxworth will be required to pay a trustee the amount that will be required to fund the plan, a. Use linear programming to find the minimum cash settlement necessary to fund the annual payments. F 6.55 5.125 F-total funds required to meet the six years of payments G1 units of government security 1 G2-units of government security 2 S-investment in savings at the beginning of year i Note: All decision variables are expressed in thousands of dollars. If required, round your answers to five decimal places. For subtractive or negative numbers use a minus sign even if there is a sign before the blank. (Example: -300) F+ G1+ G1+ G1+ 4 G1+ G2 G₂+ G₂+ 02+ G₂+ G2+ 51+ |52|+| 53+ 51- 52 53|-| 55
As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars): 1 1 2 3 Payment 170 210 250 Year The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 3.25% annually) and government securities, at prices and rates currently quoted in The Wall Street Journal. Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value- $1000). Funds not invested in these securities will be placed in savings. Security Current Price Rate (%) Years to Maturity 1 3 2 Let $1075 $1000 456 310 340 500 Min st. Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Haxworth will be required to pay a trustee the amount that will be required to fund the plan, a. Use linear programming to find the minimum cash settlement necessary to fund the annual payments. F 6.55 5.125 F-total funds required to meet the six years of payments G1 units of government security 1 G2-units of government security 2 S-investment in savings at the beginning of year i Note: All decision variables are expressed in thousands of dollars. If required, round your answers to five decimal places. For subtractive or negative numbers use a minus sign even if there is a sign before the blank. (Example: -300) F+ G1+ G1+ G1+ 4 G1+ G2 G₂+ G₂+ 02+ G₂+ G2+ 51+ |52|+| 53+ 51- 52 53|-| 55
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter11: Simulation Models
Section11.3: Financial Models
Problem 28P
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Transcribed Image Text:Topic 4 - Linear Programming: Appli
Problem 9-07 (Algorithmic)
As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars):
Year
1
2 3 4 5 6
Payment 170 210 250 310 340 500
Y
Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value $1000). Funds not invested in these securities will be placed in savings.
Security Current Price Rate (%) Years to Maturity
1
3
2
4
$1075
$1000
The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 3.25% annually) and government securities, at prices and rates currently quoted in
The Wall Street Journal.
Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to pay a trustee the amount that will be required to fund the plan.
a. Use linear programming to find the minimum cash settlement necessary to fund the annual payments.
Let
F total funds required to meet the six years of payments
G1 units of government security 1
G2 units of government security 2
S-investment in savings at the beginning of year i
Min
s.t.
6.55
5.125
Note: All decision variables are expressed in thousands of dollars.
If required, round your answers to five decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)
F
F +
G1+
G1+
G1+
+ li +
G2+
G2+
G2 +
G2 +
takeAssignmentSessionLocator=&inprogress=false
G G2
G2 +
51 +
52 +
$S3 +
S4 +
55 +
$1
1521-1
$3-
54-
ss-
56-
Round your answer to the nearest dollar. If an amount is zero, enter "0".
A Q ☆
@ e
3
cb ☆ €
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