Sandra has at most $50,000 to invest in stocks, bonds, and money market funds. She expects annual yields of 15%, 10%, and 8%, respectively, on these investments. If Sandrawants at least $12,500 to be invested in money market funds and requires that the amount invested in bonds be greater than or equal to the sum of her investments in stocksand money market funds, determine how much she should invest in each vehicle to maximize the return on her investments.stocks$$bondsmoney market funds$What is the maximum return?$

This can be modelled as a LP problem and the equations and details are shown below: Decision…

Answered: Sandra has at most $50,000 to invest in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sean is willing to invest $40,000 for five years, and is an economically rational investor. He has identified three investment alternatives (X, Y, and Z) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the five-year investment period, complete the following table and indicate whether Sean should invest in each of the investments. Note: When calculating each investment's future value, assume that all interest is compounded annually. The final value should be rounded to the nearest whole dollar. Investment Interest rate and Method : Expected future value Make this investment? X 11% compound interest 13% compound interest 13% simple interest Y Z
Mrs. John wants to take the next three years off work to travel around the world. She estimates herannual cash needs at $20,000. Mrs. John believes she can invest her savings at 10% until she depletesher funds. Table factor at 10% is 4.883 and at 7% is 4.152To find out how much she should invest now to fund her future cash flow if she invests at 10%. Or whatto invest if only earn 7 %.( Present value of annuity)
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Doris plans to save $5000 per year for the next 35 years. Her money will be deposited in a stock market index fund that has a 0.5% annual management fee. If this fund earns 6% per year, how much will Doris save by investing in this fund instead of an actively managed mutual fund that has a 1% annual fee? Compute your answer as a future amount at the end of year . Assume that payments are made at the end of year. The future equivalent of savings amount at the end of year 35 is ___.

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