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Practical Management Science | 4th
Edition
Chapter 4, Problem 61P
(1)
Problem
An investor has $100,000 to invest right now (the beginning of year 1). The cash flows
associated with five available investments are listed in the file P04_61.xlsx. For example, every
dollar invested in A in year 1 yields $1.40 in year 4. In addition to these investments, the investor
can invest as much money each year as he wants in CDs, which pay 3% interest. The investor
wants to maximize his available cash in year 4. Assuming that he can put no more than $50,000
in any investment, develop an LP model to help the investor achieve his goal.
Step-by-step solution
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Step 1/10
Suppose we are given the following situation: there are various choices of investments it
can make over the course of 4 years. We have $100,000 to invest initially and there are
five investment options, A, B, C, D, and E. Uninvested money can go into a CD which