Develop a linear programming model to minimize the total dollars needed to be invested now to meet the expansion cash needs in the next 8 years. Hint: this is the objective function. Use Excel Solver, solving method: Simplex LP.How many units of each security 1, 2, and 3 should the corporation purchase? What is the investment amount in each security 1, 2, and 3 in year 1?How much should the corporation place in the savings account in each of the 8 years?Assuming the corporation currently has $1.8 Million available cash to invest and given the cash needs for the expansion, is the investment plan that you developed feasible? Explain your answer and provide reasoning. 1. Read the following scenario and then answer the essay questions listed below to complete the exercise.ScenarioYour corporation has just approved an 8-year expansion plan to grow itsmarket share. The plan requires an influx of cash in each of the 8 years.Management wants to develop a financial plan to ensure the cash neededfor the expansion will be available at the beginning of each of the 8years.The corporation has the following investment options:SecurityPrice perReturn RateYears tounit(%)Maturity1$1,20010.2552$1,0006.7550$1,17512.1107SavingsAccount5.500Each unit of security 1, 2, and 3 quarantees to pay $1,000 at maturity. Each unit of security 1, 2, and 3 guarantees to pay $1,000 at maturity.Investments in these securities must take place only at the beginning ofyear 1 and will be held until maturity. Any funds not invested insecurities will be invested in a savings account that pays the annualinterest rates noted above.The following table summarizes the cash needs for the expansion planfor each of the 8 years:Year 1 = $250,000Year 5 = $295,000Year 2 = $300,000Year 6 = $310,000Year 3 = $225,000Year 7 = $280,000Year 4 = $235,000Year 8 = $305,000

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Answered: Your corporation has just approved an…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

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Develop a linear programming model to minimize the total dollars needed to be invested now to meet the expansion cash needs in the next 8 years. Hint: this is the objective function. Use Excel Solver, solving method: Simplex LP.
How many units of each security 1, 2, and 3 should the corporation purchase? What is the investment amount in each security 1, 2, and 3 in year 1?
How much should the corporation place in the savings account in each of the 8 years?
Assuming the corporation currently has $1.8 Million available cash to invest and given the cash needs for the expansion, is the investment plan that you developed feasible? Explain your answer and provide reasoning.

Each unit of security 1, 2, and 3 guarantees to pay $1,000 at maturity.
Investments in these securities must take place only at the beginning of
year 1 and will be held until maturity. Any funds not invested in
securities will be invested in a savings account that pays the annual
interest rates noted above.
The following table summarizes the cash needs for the expansion plan
for each of the 8 years:
Year 1 = $250,000
Year 5 = $295,000
Year 2 = $300,000
Year 6 = $310,000
Year 3 = $225,000
Year 7 = $280,000
Year 4 = $235,000
Year 8 = $305,000

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