1) Mr. Perez wants to invest up to $20,000 in two stocks, Cal Computers and Texas Tools. The Cal computers stock is expected to yield a 16% annual return, while the Texas Tools stock promises a 12% yield. Mr. Perez would like to earn at least $2,800 this year. According to Value Line Magazine's safety index (1 highest to 5 lowest), Cal Computers has a safety number 3 and Texas Tools has a safety number of 2. How much money should he invest in each to minimize the safety number? A lower safety number means less risk. Please explain answer

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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1) Mr. Perez wants to invest up to $20,000 in two stocks, Cal Computers and Texas
Tools. The Cal computers stock is expected to yield a 16% annual return, while
the Texas Tools stock promises a 12% yield. Mr. Perez would like to earn at least
$2,800 this year. According to Value Line Magazine's safety index (1 highest to 5
lowest), Cal Computers has a safety number 3 and Texas Tools has a safety
number of 2. How much money should he invest in each to minimize the safety
number? A lower safety number means less risk.
Please explain
answer
Transcribed Image Text:1) Mr. Perez wants to invest up to $20,000 in two stocks, Cal Computers and Texas Tools. The Cal computers stock is expected to yield a 16% annual return, while the Texas Tools stock promises a 12% yield. Mr. Perez would like to earn at least $2,800 this year. According to Value Line Magazine's safety index (1 highest to 5 lowest), Cal Computers has a safety number 3 and Texas Tools has a safety number of 2. How much money should he invest in each to minimize the safety number? A lower safety number means less risk. Please explain answer
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