The Rio Credit Union has $250,000 available to invest in a 12-month commitment and wants to invest all of it. The money can be placed in Brazilian treasury notes yielding an 8% return or in riskier high-yield bonds at an average rate of return of 9%. Credit union regulations require diversification to the extent that at least 50% of the investment be placed in Treasury notes. It is also decided that no more than 30% of the investment be placed in bonds. The aim of the objective function for Rio Credit Union should be to the objective value. Decision variables: X = $ invested in Treasury notes Y = $ invested in Bonds Objective function (in decimals, eg., .07, NOT 7%): Z=ROI=X+Y Subject to: 1X+1Y 1X+0Y OX+1Y X, Y 20 ▼$250,000 (C₁) ▼$125,000 (C₂) $75,000 (C3) CD Y (in 000) 300- 250- 200- 150- 100- 50- 50 100 C2 150 X (in 000) 200 C1 250 C3 300 Q
The Rio Credit Union has $250,000 available to invest in a 12-month commitment and wants to invest all of it. The money can be placed in Brazilian treasury notes yielding an 8% return or in riskier high-yield bonds at an average rate of return of 9%. Credit union regulations require diversification to the extent that at least 50% of the investment be placed in Treasury notes. It is also decided that no more than 30% of the investment be placed in bonds. The aim of the objective function for Rio Credit Union should be to the objective value. Decision variables: X = $ invested in Treasury notes Y = $ invested in Bonds Objective function (in decimals, eg., .07, NOT 7%): Z=ROI=X+Y Subject to: 1X+1Y 1X+0Y OX+1Y X, Y 20 ▼$250,000 (C₁) ▼$125,000 (C₂) $75,000 (C3) CD Y (in 000) 300- 250- 200- 150- 100- 50- 50 100 C2 150 X (in 000) 200 C1 250 C3 300 Q
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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