Type of Loan/Investment Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities Annual Rate of Return (%) 9 11 x x x 12 What is the projected total annual return? $514800 13 The credit union will have $2,200,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the compos . Risk-free securities may not exceed 30% of the total funds available for investment. . Signature loans may not exceed 10% of the funds invested in a loans (automobile, furniture, other secured, and signature loans). 10 • Furniture loans plus other secured loans may not exceed the automobile loans. . Other secured loans plus signature loans may not exceed the furids invested in risk-free securities. How should the $2,200,000 be allocated to each of the loan/investment alternatives to maximize total annual return? Automobile loans $22 Furniture loans $1540000 Other secured loans $440000 Signature loans $220000 Risk-free securities $660000

Type of Loan/Investment Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities Annual Rate of Return (%) 9 11 x x x 12 What is the projected total annual return? $514800 13 The credit union will have $2,200,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the compos . Risk-free securities may not exceed 30% of the total funds available for investment. . Signature loans may not exceed 10% of the funds invested in a loans (automobile, furniture, other secured, and signature loans). 10 • Furniture loans plus other secured loans may not exceed the automobile loans. . Other secured loans plus signature loans may not exceed the furids invested in risk-free securities. How should the $2,200,000 be allocated to each of the loan/investment alternatives to maximize total annual return? Automobile loans $22 Furniture loans $1540000 Other secured loans $440000 Signature loans $220000 Risk-free securities $660000

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter11: Linear Optimization Models

Section: Chapter Questions

Problem 11P: The employee credit union at State University is planning the allocation of funds for the coming...

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The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments, together with annual rates of return, are as follows. Type of Loan/Investment Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities $ ● Automobile loans The credit union will have $2,400,000 available for investment during the ng year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. Furniture loans Other secured loans • Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). Signature loans Risk-free securities • Furniture loans plus other…
The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue- producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 7 Furniture loans 10 Other secured loans Signature loans Risk-free securities . The credit union will have $2 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments: • Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). Type of Loan/Investment Automobile loans Furniture loans 11 Furniture loans plus other…
The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows. Type of Loan/Investment Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities ● How should the $2,400,000 Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities to LA The credit union will have $2,400,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. LA Annual Rate of Return (%) • Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other…
The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 8 Furniture loans 10 Other secured loans 11 Signature loans 12 Risk-free securities 9 The credit union will have $2 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments: Risk-free securities may not exceed 30% of the total funds…
Consider the following Balance Sheet for Forward Thinking Commercial Bank(FTCB) (in millions) ASSETS LIABILITIES Floating rate mortgages 250 Demand deposits 300 (currently 14% annually) (currently 5% annually) 30 years fixed rate loans 1 year CD 50 (currently 9% annually) 120 (currently 8% annually) Equity 20 370 370 a. What is FTCB expected net interest income (NII) at year end? b. What is FTCB expected net interest income at year end if interest rates fell by seven percent (7%). c. What is FTCB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.
The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 9. Furniture loans 11 Other secured loans 12 Signature loans 13 Risk-free securities 10 The credit union will have $2.3 million alailable for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments: • Risk-free securities may not exceed 30% of the total funds available for investment. • Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). • Furniture loans plus other secured loans may not exceed the automobile…
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The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments, together with annual rates of return, are as follows: The credit union will have 2 million available for investment during the coming year. State laws are credit union policies impose the following restrictions on the composition of the loans and investments: Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). Furniture loans plus other secured loans may not exceed the automobile loans. Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the 2 million be allocated to each of the loan/investment alternatives to maximize total annual return? What is the projected total annual return?
Effective Cost of Short-Term Credit Yonge Corporation must arrange financing for its working capital requirements for the coming year. Yonge can: (a) borrow from its bank on a simple interest basis (interest payable at the end of the loan) for 1 year at a 12% nominal rate; (b) borrow on a 3-month, but renewable on rate with 12 end-of-month payments; or (d) obtain the needed funds by no longer taking discounts and thus increasing its accounts payable. Yonge buys on terms of 1/15, net 60. What is the effective annual cost (not the nominal cost) of the least expensive type of credit, assuming 360 days per year?