25. George Johnson recently inherited a large sum of money; he wants to use a portion of this moneyto set up a trust fund for his two children. The trust fund has two investment options: (1) a bondfund and (2) a stock fund. The projected returns over the life of the investments are 6% for thebond fund and 10% for the stock fund. Whatever portion of the inheritance he finally decidesto commit to the trust fund, he wants to invest at least 30% of that amount in the bond fund. Inaddition, he wants to select a mix that will enable him to obtain a total return of at least 7.5%.a. Formulate a linear programming model that can be used to determine the percentagethat should be allocated to each of the possible investment alternatives.b. Solve the problem using the graphical solution procedure.

given, 6% for the bond fund 10% stock fund The total return of at least 7.5%

Answered: 5. George Johnson recently inherited a…

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...

See similar textbooks

Similar questions

Kualoa Corporation is trying to assess the risk of two possible capital budgeting proposals. The company has developed pessimistic, most likely, and optimistic estimates of the annual cash inflows. They are given in the following table. The firm's cost of capital is 10 percent. What is the range of the annual cash inflows for Project A?
Kara wants to build a business. She has plenty of capital and potential investors and partners. She wants to avoid the burden of sole liability for her business and wants to be able to close the business when she is no longer interested in it. Which of the following would lead Kara to choose a sole proprietorship organization for her business? Avoidance of sole liability Ability to close the business easily Many potential investors/partners Plenty of capital
19 of Vision Company purchased treasury stock with a cost of $16,000 during 2017. During the year, the company paid dividends of $20,000 and issued bonds payable for proceeds of $860,000. Cash flows from financing activities for 2017 total Select one: a. $840,000 net cash inflow b. $856,000 net cash inflow c. $860,000 net cash outflow d. $824,000 net cash inflow
In the prospectus for the Brazos Aggressive Growth fund, the fee table indicates that the fund has a 12b-1 fee of 0.35 percent and an expense ratio of 1.55 percent that is collected once a year on December 1. Joan and Don Norwood have shares valued at $114,500 on December 1. What is the amount of the 12b-1 fee this year? What is the amount they will pay for expenses this year?
Subject: acounting
5. If money can be invested at 5% compounded annually, A. Accumulate P1,000 for 15 years. B. Discount the result of problem A for 10 years. C. Accumulate P1,000 for 5 years. Compare the results of B and C.
The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: Jones, the managing partner, receives a bonus equal to 25 percent of the business's profit. Each partner receives 19 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2021 were as follows: Jones $ 125,000 King 250,000 Lane 375,000 The partnership earned $58, 000 net income for 2021. Prepare a schedule showing how the 2021 net income should be allocated to the partners. (Loss amounts should be indicated with a minus sign.)
Mono Industries has a project with the following projected cash flows: Initial Cost, Year 0: P200,000 Cash flow year one: P25,000 Cash flow year two: P75,000 Cash flow year three: P150,000 Cash flow year four: P150,000 Using a 10% discount rate for this project and the NPV model, should this project be accepted or rejected?
Ann, age 61, and Bob, age 62, have a large number of investments in common stock of publicly traded corporations, some municipal bonds, and a money market cash account worth several million dollars. In addition, they own a ranch in Texas that may be worth $100,000,000. They have a large family consisting of three sons, four daughters, and fifteen grandchildren. What are some alternatives that Ann and Bob could consider in order to reduce their taxable estate, assuming that the estate tax law is not yet abolished or amended by Congress before the two taxpayers die? What are the consequences if Ann and Bob decide to gift investments worth $1,000,000 to each of their children and grandchildren? What are the consequences of leaving a large estate that will be divided among their children and grandchildren? cite your sources
Strassel Investors buys real estate, develops it, and resells it for a profit. A new property is available, and Bud Strassel, the president and owner of Strassel Investors, believes if he purchases and develops this property, it can then be sold for $156,000. The current property owner has asked for bids and stated that the property will be sold for the highest bid in excess of $100,000. Two competitors will be submitting bids for the property. Strassel does not know what the competitors will bid, but he assumes for planning purposes that the amount bid by each competitor will be uniformly distributed between $100,000 and $146,000. (a) What is the estimate of the probability Strassel will be able to obtain the property using a bid of $126,000? (Use at least 5,000 trials. Round your answer three decimal places.) (b) How much does Strassel need to bid to be assured of obtaining the property? $126,000 $136,000 $146,000 (c) Use the simulation model to compute the profit…
A small strip-mining coal company is trying to decide whether it should purchase or lease a new clamshell. If purchased, the “shell” will cost $152,500 and is expected to have a $50,000 salvage value after 6 years. Alternatively, the company can lease a clamshell for only $16,000 per year, but the lease payment will have to be made at the beginning of each year. If the clamshell is purchased, it will be leased to other strip-mining companies whenever possible, an activity that is expected to yield revenues of $9,000 per year. If the company’s MARR is 13% per year, should the clamshell be purchased or leased on the basis of a future worth analysis? Assume the annual M&O cost is the same for both options. The future worth when purchased is $ The future worth when leased is $

Recommended textbooks for you

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Operations Management

ISBN:

9781259667473

Author:

William J Stevenson

Publisher:

McGraw-Hill Education

Operations and Supply Chain Management (Mcgraw-hi…

Operations Management

ISBN:

9781259666100

Author:

F. Robert Jacobs, Richard B Chase

Publisher:

McGraw-Hill Education

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Operations Management

ISBN:

9781259667473

Author:

William J Stevenson

Publisher:

McGraw-Hill Education

Operations and Supply Chain Management (Mcgraw-hi…

Operations Management

ISBN:

9781259666100

Author:

F. Robert Jacobs, Richard B Chase

Publisher:

McGraw-Hill Education

Business in Action

Operations Management

ISBN:

9780135198100

Author:

BOVEE

Publisher:

PEARSON CO

Purchasing and Supply Chain Management

Operations Management

ISBN:

9781285869681

Author:

Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:

Cengage Learning

Production and Operations Analysis, Seventh Editi…

Operations Management

ISBN:

9781478623069

Author:

Steven Nahmias, Tava Lennon Olsen

Publisher:

Waveland Press, Inc.

SEE MORE TEXTBOOKS