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A linear programming computer package is needed. 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 Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities Annual Rate of Return (%) 9 $ $ $ $ $ 11 What is the projected total annual return? $ 12 13 The credit union will have $2,400,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. 10 • Risk-free securities may not exceed 30% of the total funds available for investment. • Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). • Furniture loans plus other secured loans may not exceed the automobile loans. • Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $2,400,000 be allocated to each of the loan/investment alternatives to maximize total annual return? Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities

A linear programming computer package is needed. 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 Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities Annual Rate of Return (%) 9 $ $ $ $ $ 11 What is the projected total annual return? $ 12 13 The credit union will have $2,400,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. 10 • Risk-free securities may not exceed 30% of the total funds available for investment. • Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). • Furniture loans plus other secured loans may not exceed the automobile loans. • Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the $2,400,000 be allocated to each of the loan/investment alternatives to maximize total annual return? Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities

Foundations of Business - Standalone book (MindTap Course List)
Foundations of Business - Standalone book (MindTap Course List)
4th Edition
ISBN:9781285193946
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Chapter15: Using Management And Accounting Information
Section: Chapter Questions
Problem 5DQ
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A linear programming computer package is needed. 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 Automobile loans. ● Furniture loans Other secured loans Signature loans Risk-free securities Annual Rate of Return (%) 9 $ $ $ $ $ 11 What is the projected total annual return? $ 12 The credit union will have $2,400,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. 13 • Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). • Furniture loans plus other secured loans may not exceed the automobile loans. • Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. 10 How should the $2,400,000 be allocated to each of the loan/investment alternatives to maximize total annual return? Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities
Transcribed Image Text:A linear programming computer package is needed. 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 Automobile loans. ● Furniture loans Other secured loans Signature loans Risk-free securities Annual Rate of Return (%) 9 $ $ $ $ $ 11 What is the projected total annual return? $ 12 The credit union will have $2,400,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments. 13 • Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). • Furniture loans plus other secured loans may not exceed the automobile loans. • Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. 10 How should the $2,400,000 be allocated to each of the loan/investment alternatives to maximize total annual return? Automobile loans Furniture loans Other secured loans Signature loans Risk-free securities
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