Question

1.8. (Lewis, 1996). Monthly bills in a household are received monthly (e.g., utilities and home mortgage), quarterly (e.g., estimated tax payments), semiannually (e.g., insurance) or annually, (e.g., subscription renewals and dues). The following table provides the monthly bills for next year. Month Jan Nov Feb. Mar. July Total Apr May June Aug. Sep. Oct. Dec. S 800 1,200 400 700 600 900 1,500 1,000 900 1,100 1,300 1,600 12,000 To account for these expenses, the family sets aside $1,000 per month, which is the average of the total divided by 12 months. If the money is deposited in a regular saving account, it can earn 4% annual interest, provided it stays in the account at least one month. The bank also offers three-month and six-month certificates of deposit that can earn 5.5% and 7% annual interest, respectively. Develop a 12-month investment schedule that will maximize the family total return for the year.

Answer 1

ANSWER

Month	Expenses	Amount Set Aside	Surplus/ Deficit	Amount available for Investment	Required in	No. of months amount can be invested	Return from Investment
Jan	800	1000	200	200	Feb	1	200 x 4% x 1/12 =	0.67
Feb	1200	1000	-200	0	-	-
Mar	400	1000	600	600	Dec	9	600 x 7% x 6/12 + 600 x 5.5% x 3/12 =	29.25
Apr	700	1000	300	300	Nov	7	300 x 7% x 6/12 + 300 x 4% x 1/12 =	11.50
May	600	1000	400	400	Jul	2	400 x 4% x 2/12 =	2.67
Jun	900	1000	100	100	Jul	1	100 x 4% x 1/12 =	0.33
Jul	1500	1000	-500	0	-	-
Aug	1000	1000	0	0	-	-
Sep	900	1000	100	100	Oct	1	100 x 4% x 1/12 =	0.33
Oct	1100	1000	-100	0	-	-
Nov	1300	1000	-300	0	-	-
Dec	1600	1000	-600	0	-	-
	12000	12000						44.7

===========================================

DEAR STUDENT,

If you have any query or any Explanation please ask me in the comment box, i am here to helps you.please give me positive rating

*****************THANK YOU**************