Alexis Harrington received an inheritance of $95,000, and she is considering two speculative investmentsthe purchase of land and the purchase ofcattle. Each investment would be for 1 year. Under the present (normal) economic conditions, each dollar invested in land will return the principalplus 20% of the principal; each dollar invested in cattle will return the principal plus 30%. However, both investments are relatively risky. If economic conditions were to deteriorate, there is an 18% chance she would lose everything she invested in land and a 30% chance she would loseeverything she invested in cattle. Alexis does not want to lose more than $20,000 (on average). She wants to know how much to invest in eachalternative to maximize the cash value of the investments at the end of 1 year Should all of Alexis's inheritance be invested according to the optimal solution?
Alexis Harrington received an inheritance of $95,000, and she is considering two speculative investmentsthe purchase of land and the purchase of
cattle. Each investment would be for 1 year. Under the present (normal) economic conditions, each dollar invested in land will return the principal
plus 20% of the principal; each dollar invested in cattle will return the principal plus 30%. However, both investments are relatively risky. If economic conditions were to deteriorate, there is an 18% chance she would lose everything she invested in land and a 30% chance she would lose
everything she invested in cattle. Alexis does not want to lose more than $20,000 (on average). She wants to know how much to invest in each
alternative to maximize the cash value of the investments at the end of 1 year Should all of Alexis's inheritance be invested according to the optimal solution?
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
![Operations Management](https://www.bartleby.com/isbn_cover_images/9781259667473/9781259667473_smallCoverImage.gif)
![Operations and Supply Chain Management (Mcgraw-hi…](https://www.bartleby.com/isbn_cover_images/9781259666100/9781259666100_smallCoverImage.gif)
![Practical Management Science](https://www.bartleby.com/isbn_cover_images/9781337406659/9781337406659_smallCoverImage.gif)
![Operations Management](https://www.bartleby.com/isbn_cover_images/9781259667473/9781259667473_smallCoverImage.gif)
![Operations and Supply Chain Management (Mcgraw-hi…](https://www.bartleby.com/isbn_cover_images/9781259666100/9781259666100_smallCoverImage.gif)
![Business in Action](https://www.bartleby.com/isbn_cover_images/9780135198100/9780135198100_smallCoverImage.gif)
![Purchasing and Supply Chain Management](https://www.bartleby.com/isbn_cover_images/9781285869681/9781285869681_smallCoverImage.gif)
![Production and Operations Analysis, Seventh Editi…](https://www.bartleby.com/isbn_cover_images/9781478623069/9781478623069_smallCoverImage.gif)