Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 4% for home loans, 14% for personal loans, and 9% for automobile loans. The bank’s planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans.
(a) | Formulate a linear programming model that can be used to determine the amount of funds ASB should allocate to each type of loan to maximize the total annual return for the new funds. If the constant is "1" it must be entered in the box. If your answer is zero enter “0”. | |||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||
(b) | How much should be allocated to each type of loan? | |||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||
What is the total annual return? | ||||||||||||||||||||||||||||||||||||||||||||||
If required, round your answer to nearest whole dollar amount. | ||||||||||||||||||||||||||||||||||||||||||||||
$ | ||||||||||||||||||||||||||||||||||||||||||||||
What is the annual percentage return? | ||||||||||||||||||||||||||||||||||||||||||||||
If required, round your answer to two decimal places. | ||||||||||||||||||||||||||||||||||||||||||||||
% | ||||||||||||||||||||||||||||||||||||||||||||||
(c) | If the interest rate on home loans increases to 9%, would the amount allocated to each type of loan change? | |||||||||||||||||||||||||||||||||||||||||||||
No- Select your answer -YesNoItem 21 | ||||||||||||||||||||||||||||||||||||||||||||||
Explain. | ||||||||||||||||||||||||||||||||||||||||||||||
The input in the box below will not be graded, but may be reviewed and considered by your instructor. | ||||||||||||||||||||||||||||||||||||||||||||||
(d) | Suppose the total amount of new funds available is increased by $10,000. What effect would this have on the total annual return? Explain. | |||||||||||||||||||||||||||||||||||||||||||||
If required, round your answer to nearest whole dollar amount. | ||||||||||||||||||||||||||||||||||||||||||||||
An increase of $10,000 to the total amount of funds available would increase the total annual return by $ . | ||||||||||||||||||||||||||||||||||||||||||||||
(e) | Assume that ASB has the original $1 million in new funds available and that the planning committee has agreed to relax the requirement that at least 40% of the new funds must be allocated to home loans by 1%. How much would the annual return change? | |||||||||||||||||||||||||||||||||||||||||||||
If required, round your answer to nearest whole dollar amount. | ||||||||||||||||||||||||||||||||||||||||||||||
$ | ||||||||||||||||||||||||||||||||||||||||||||||
How much would the annual percentage return change? | ||||||||||||||||||||||||||||||||||||||||||||||
If required, round your answer to two decimal places. | ||||||||||||||||||||||||||||||||||||||||||||||
% |
Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, p...
Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 4% for home loans, 10% for personal loans, and 7% for automobile loans. The bank's planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal...
Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 5% for home loans, 13% for personal loans, and 8% for automobile loans. The bank’s planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal...
Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 5% for home loans, 11% for personal loans, and 11% for automobile loans. The bank's planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal...
Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 5% for home loans, 11% for personal loans, and 8% for automobile loans. The bank’s planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal...
Adirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 5% for home loans, 13% for personal loans, and 8% for automobile loans. The bank’s planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal...
ch 12 LP Quiz -2 ark ASB) has $1 m rds that must be alocated toho ne loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 7% for home loans, on n new 14% for personal loans, and 8% for automoble loans. The bank's peched that the amount alocated to personal loans cannot exceed 60% of the amount allocated to automobile loans. planning committee has deode that at least 40% of...
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 revenueproducing investments together with annual rates of return are as follows: Type of Loan/Investment Annual Rate of Return (% Automobile loans Furniture loans 12 Other secured loans 14 Signature loans 13 Risk-free securities The credit union will have...
Problem 4-03 (Algorithmic)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 revenueproducing investments together with annual rates of return are as follows:Type of Loan/InvestmentAnnual Rate of Return (%)Automobile loans8Furniture loans12Other secured loans14Signature loans13Risk-free securities9The credit union will have $1.7 million available for investment during the coming year....
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 Furniture loans Other secured loans Signature loans Risk-free securities 10 12 8 The credit union will have...
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 11 Signature loans 12 Risk-free securities 9 The credit union...