The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 8 Furniture loans 10 Other secured loans Signature loans Risk-free securities The credit union will have $1.8 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments: Risk-free securities may not exceed 25% of the total funds available for investment. Signature loans may not exceed 12% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). Furniture loans plus other secured loans may not exceed the automobile loans. Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $1.8 million be allocated to each of the loan/investment alternatives to maximize total annual return? Fund Allocation Type of Loan/Investment Automobile loans Furniture loans 11 12 9 Other secured loans Signature loans Risk-free securities What is the projected total annual return? Annual Return-E
The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 8 Furniture loans 10 Other secured loans Signature loans Risk-free securities The credit union will have $1.8 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments: Risk-free securities may not exceed 25% of the total funds available for investment. Signature loans may not exceed 12% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). Furniture loans plus other secured loans may not exceed the automobile loans. Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $1.8 million be allocated to each of the loan/investment alternatives to maximize total annual return? Fund Allocation Type of Loan/Investment Automobile loans Furniture loans 11 12 9 Other secured loans Signature loans Risk-free securities What is the projected total annual return? Annual Return-E
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text:The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit
union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows:
Type of Loan/Investment Annual Rate of Return (%)
Automobile loans.
8
Furniture loans
10
Other secured loans
Signature loans
Risk-free securities
The credit union will have $1.8 milion available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans
and investments:
Risk-free securities may not exceed 25% of the total funds available for investment.
Signature loans may not exceed 12% of the funds invested in all loans (automobile, furniture, other secured, and signature loans).
Furniture loans plus other secured loans may not exceed the automobile loans.
Other secured loans plus signature loans may not exceed the funds invested in risk-free securities.
How should the $1.8 million be allocated to each of the loan/investment alternatives to maximize total annual return?
Fund Allocation
Type of Loan/Investment
Automobile loans
Furniture loans
Other secured loans
11
12
Signature loans
Risk-free securities
What is the projected total annual return?
Annual Return-s
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