80 7아 60 50 40 30 20아 10 10 20 30 40 50 60 70 80 90 100 25. George Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment options: (1) a bond fund and (2) a stock fund. The projected returns over the life of the investments are 6% for the bond fund and 10% for the stock fund. Whatever portion of the inheritance he finally decides to commit to the trust fund, he wants to invest at least 30% of that amount in the bond fund. In addition, 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 percentage
80 7아 60 50 40 30 20아 10 10 20 30 40 50 60 70 80 90 100 25. George Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment options: (1) a bond fund and (2) a stock fund. The projected returns over the life of the investments are 6% for the bond fund and 10% for the stock fund. Whatever portion of the inheritance he finally decides to commit to the trust fund, he wants to invest at least 30% of that amount in the bond fund. In addition, 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 percentage
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:FIGURE 2.22 GRAPH OF THE CONSTRAINT LINES FOR EXERCISE 21
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25. George Johnson recently inherited a large sum of money; he wants to use a portion of this money
to set up a trust fund for his two children. The trust fund has two investment options: (1) a bond
fund and (2) a stock fund. The projected returns over the life of the investments are 6% for the
bond fund and 10% for the stock fund. Whatever portion of the inheritance he finally decides
to commit to the trust fund, he wants to invest at least 30% of that amount in the bond fund. In
addition, 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 percentage
that should be allocated to cach of the possible investment alternatives.
b. Solve the problem using the graphical solution procedure.
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