Michael has decided to invest $40,000 in three types of funds. Fund A has projected an annual return of 8 percent, Fund B has projected an annual return of 10 percent, and Fund C has projected an annual return of 9 percent. He has decided to invest no more than 30 percent of the total amount in Fund B and no more than 40 percent of the total amount in Fund C.
a. Formulate a linear programming model that can be used to determine the amount of investments Michael should allocate to each type of fund to maximize the total annual return.b. How much should be allocated to each type of fund? What is the total annual return?
What will be an ideal response?
B = amount invested in Fund B
C = amount invested in Fund C
Max 0.08A + 0.10B + 0.09C
s.t.
A + B + C = 40000
B ? 0.3(A + B + C) ? B ? 12000
C ? 0.4(A + B + C) ? B ? 16000
A, B, and C? 0
b.
Cell 18 =SUM(B15:B17)
Cell 20 =SUMPRODUCT(B4:B6,B15:B17)
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