Problem

You have just received word that a wealthy relative who died very recently left a provisio...

You have just received word that a wealthy relative who died very recently left a provision in her will for an endowment to support your education, and that of any children you have or may have in the future. Starting on August 1st of each year, and every two months thereafter, the estate issues a check for $25,000 payable to you. You have three options for investing these funds.

1. A special 2-month Treasury note that returns 1.8% on the invested amount,

2. A 4-month money market fund that returns 4.0% on the invested amount, or

3. A seasonal 6-month futures option returning 8.1% on the invested amount available only on January 1 of each year.

All funds deposited in any investment instrument must remain in the account through the entire investment period, but then may be withdrawn and held, or reinvested during the next period. And to ensure diversification of investment, not more than 60% of total assets may reside in any one vehicle at any time. The will further states that on July 31 of each year, all money resulting from these contributions must be withdrawn and spent on your education.

Formulate a linear program that will suggest an investment strategy that will maximize the amount you have available to spend on education.

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search
Solutions For Problems in Chapter 4