Problem 5. You have to determine an investment strategy for the next three years. At present (time 0) the amount of $100,000 is available for investment. Five investments are available. The cash flows associated with investing $1 in each of them are given in the table below. At most $75,000 can be placed in any single investment. Returns from investments can be reinvested immediately. Cash earns 8% per year. The cash flows are given in the table below. Time 3 $0.50 $0.00 -$1.00 Investment C| -$1.00 | $1.20 $0.00 Investment A -$1.00 $0.00 $1.00 $0.50 $1.00 $0.00 $0.00 $0.00 $1.90 $0.00 -$1.00 $1.50 Investment B -$1.00 $0.00 Investment D Investment E This table should be read as follows: every dollar committed to Investment A causes outflow of $1 at time 0 (now), inflow of $0.50 at time 1, and inflow of $1 at time 2. Each dollar committed to Investment B results in outflow of $1 at time 1, inflow of $0.50 at time 2, and inflow of $1 at time 3, etc. Money obtained from Investment A at time 1 can be used to invest in B. Formulate a linear optimization model for designing an optimal investment strategy. Clearly describe all variables and constraints. Solve the problem in Excel or any other software.

Problem 5. You have to determine an investment strategy for the next three years. At present (time 0) the amount of $100,000 is available for investment. Five investments are available. The cash flows associated with investing $1 in each of them are given in the table below. At most $75,000 can be placed in any single investment. Returns from investments can be reinvested immediately. Cash earns 8% per year. The cash flows are given in the table below. Time 3 $0.50 $0.00 -$1.00 Investment C| -$1.00 | $1.20 $0.00 Investment A -$1.00 $0.00 $1.00 $0.50 $1.00 $0.00 $0.00 $0.00 $1.90 $0.00 -$1.00 $1.50 Investment B -$1.00 $0.00 Investment D Investment E This table should be read as follows: every dollar committed to Investment A causes outflow of $1 at time 0 (now), inflow of $0.50 at time 1, and inflow of $1 at time 2. Each dollar committed to Investment B results in outflow of $1 at time 1, inflow of $0.50 at time 2, and inflow of $1 at time 3, etc. Money obtained from Investment A at time 1 can be used to invest in B. Formulate a linear optimization model for designing an optimal investment strategy. Clearly describe all variables and constraints. Solve the problem in Excel or any other software.

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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Similar questions

You put $53,330 into an investment account that earns 10.6% compounded semi- annually for the first 8 years; and 7.3% compounded monthly for the next 2 years. In your rough work, it may be helpful to draw a timeline. Input all calculator values, show dollar amounts with 2 decimals, ex.: 1234.56 Part 1: How much will be in the investment account after the first 8 years? N= 1/Y = P/Y = PV = FV = 1.325 53330 I A A A A
You have been depositing money into an account yearly based on the following investment amounts, rates and times, what is the value of that investment account at the end of that period? (Click here to see present value and future value tables) Amounts ofInvestment Rate Times Value at the Endof the Period $9,000 20% 16 years $fill in the blank 1 $13,000 15% 11 years $fill in the blank 2 $16,000 12% 6 years $fill in the blank 3 $35,000 10% 4 years $fill in the blank 4
TOPIC: ENGINEERING ECONOMICS Specific Instructions: Solve each problem NEATLY and SYSTEMATICALLY. Show your COMPLETE solutions and BOx your final answers. Express all your answers in 2 decimal places. Problem: 1. What is the future amount of my Php 100, 000 after 5 years if I invest today at a rate of 12 % compounded annually? The inflation rate is 8 % per year. What is the actual effective rate given to the account?
Which investment will give you the higher future value in 5 years? Investment 1: You deposit $100 every month into an investment savings account that has an interest rate of 2.5% compounded daily. Investment 2: You deposit $300 every three months into an investment savings account that has an interest rate of 2.6% compounded semi-annually.
Answer the following: Show the cash flow diagram and solutions. I recieve PHP 500K 15 years from now. What amount should i invest if it will earn interest of 16% compounded annually during the 7years and 12 compounded quarterlyduring the next 7years?
Starting next year you plan to deposit $1000 each year into an account earning 9.25% effective annual return. How many years will it take for your account to grow to $20,000, if you increase your deposit each year by 5%? (Hint: use excel goal seek).
The following three investment opportunities are available. The returns for each investment for each year vary, but the first cost of each is $20,000. Based on a future worth analysis, which investment is preferred? MARR is 9%/year.
Find the future value of $400 invested at 2% for 5 years. Use financial Calculator and write out inputs
Problem #1. You invested $150 at the end of every month for 10 years at 7% interest compounded monthly. Use formulas (not tables) to calculate (a) How much your investment is worth after 10 years. Show your work. (b) If you had invested the money at the beginning of each month rather than at the end, how much would be in your account? Show your work.
SUBJECT: ENGINEERING ECONOMICS (a) Identify the Given and the Unknown or what is being asked in the problem (b)Provide the formula to be used (c)Show the complete solution. The final answer is already provided. You plan to deposit P100 into a savings account at the end of each month for the next 5 years. a.)At 3% compounded monthly, how much will you have accumulated at the end of 5 years? b.)How much difference would it make if the payments were made at the beginning of the month rather than at the end? Answer: a.) F = P6,464.67, b.) F value difference = P196.63
Dde.
Godo

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