Exercise 3.4 A company will face the following cash requirements in the next eight quarters (positive entries represent cash needs while negative entries represent cash surpluses): Q1 Q2 Q3 Q4 Q5 Q6 Q7 100 500 100 -600-500 200 600 The company has three borrowing possibilities. Q8 -900 A 2-year loan available at the beginning of Q1, with a 1% interest per quarter. • The other two borrowing opportunities are available at the beginning of every quarter: a 6-month loan with a 1.8% interest per quarter, and a quarterly loan with a 2.5% interest for the quarter. • Any surplus can be invested at a 0.5% interest per quarter. Formulate a linear program that maximizes the wealth of the company at the beginning of Q9.
Exercise 3.4 A company will face the following cash requirements in the next eight quarters (positive entries represent cash needs while negative entries represent cash surpluses): Q1 Q2 Q3 Q4 Q5 Q6 Q7 100 500 100 -600-500 200 600 The company has three borrowing possibilities. Q8 -900 A 2-year loan available at the beginning of Q1, with a 1% interest per quarter. • The other two borrowing opportunities are available at the beginning of every quarter: a 6-month loan with a 1.8% interest per quarter, and a quarterly loan with a 2.5% interest for the quarter. • Any surplus can be invested at a 0.5% interest per quarter. Formulate a linear program that maximizes the wealth of the company at the beginning of Q9.
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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Transcribed Image Text:Exercise 3.4 A company will face the following cash requirements in the
next eight quarters (positive entries represent cash needs while negative entries
represent cash surpluses):
Q1 Q2 Q3 Q4 Q5 Q6 Q7
100 500 100
-600-500 200 600
The company has three borrowing possibilities.
Q8
-900
A 2-year loan available at the beginning of Q1, with a 1% interest per quarter.
• The other two borrowing opportunities are available at the beginning of every
quarter: a 6-month loan with a 1.8% interest per quarter, and a quarterly
loan with a 2.5% interest for the quarter.
• Any surplus can be invested at a 0.5% interest per quarter.
Formulate a linear program that maximizes the wealth of the company at the
beginning of Q9.
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