Three different investment options are available at the beginning of eachyear during the next 6-year period. The duration of the investments are 1year, 3 years, and 5 years. The 1-year investment yields a total return of5.1%, the 3-year investment yields a total return of 16.2%, and the 5-year investment yields a total return of 28.5%. If an initial investment of $10,000 is made and all available funds are invested at the beginning of eachyear, formulate a linear programming model to determine the investmentpattern that results in the maximum available cash at the end of the sixthyear. Use Excel Solver to solve

Formulate the Problem:Objective function: Maximize…

Answered: ear investment yields a total return of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An investment will provide the following future cash flows. Year 1 = 5,919 Year 2 = 8,327 Year 3 and 4 = 4,718 Year 5 = 3,048 Using a 9.01% discount rate, what is the present value of this investment?
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We have three assets A1, A2, A3 and the following information: E(r1)=15%, σ1=12%,; E(r2)=19% and risk σ2=30%; E(r3)=25% and Risk σ3=35% a) Calculate the effective diversification between A1, A2, A3, and assume ρ12=ρ13=ρ23=0, the expected returns are i.17%, ii.11%
You invest $5000 at time t=0 and an additional $2000 at time t=1/2. At time t=1/2 you have $5300 in your account and at time t=1 you have $7300 in your account. Find the dollar-weighted rate of return rd and the time-weighted rate of return rt on this investment.A. rd= 2.86 %, rt=3.43 %B. rd= 2 %, rt=2.4 %C. rd= 6.26 %, rt=7.5 %D. rd= 2.51 %, rt=3 %E. rd= 5.01 %, rt= 6 % Please answer it only correct without using Excel

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ear investment yields a total return of 16.2%, and t yields a total return of 28.5%. If an initial investr