Question

[Investment, 27 pts] International City Trust (ICT) has $5 million available for investment and wishes to maximize the interest earned on its investment over the next year. The specifics of the investment possibilities are shown in the Table below. 3. Fall 2019 MGSC 1205 Introduction to Quantitative Methods I Interest Earned (Return on Investment) Investment Trade Credits 7 % 10 % Corporate bonds Gold stocks 19 % Platinum stocks 12 % 8 % Mortgage securities Construction loans 14 % To encourage diversified investment portfolio, the board of directors has placed several limits on the amount that can be committed to any one type of investment: (1) No more than 25% of the total amount invested may be in any single type of investment, (2) At least 30% of the funds invested must be in precious metals, (3) At least 45% must be invested in trade credits and corporate bond.

Answer 1

Solution :-
	Total Available Fund is $		5,000,000.00
		Trade Creditors	Corporate Bond	Gold Stock	Platinum Stock	Mortgage Securities	Construction Loans
	Rate	7%	10%	19%	12%	8%	14%
	Ranking	VI	IV	I	III	V	II
Conditions	(i) Not More the 25% in any case	1,250,000.00	1,250,000.00	1,250,000.00	1,250,000.00	1,250,000.00	1,250,000.00
	(ii) At lease 30 % in precious Metals			Must Be up to 15,00,000.00
	(iii) At least 45% in Trade Creditors & Corporate Bonds	Must Be up to 2,250,000.00
Answer	Fund Allotted	1,000,000.00	1,250,000.00	1,250,000.00	250,000.00	0	1,250,000.00
	Interest Earned	70,000.00	125,000.00	237,500.00	30,000.00	0	175,000.00