Linear Programming: Sample Case Write-up
Mr. Fred Wheeler
Wheeler's Wheels, Inc.
123 Revemup Boulevard
January 30, 2007
Dear Mr. Wheeler:
Per our discussion of your investment needs, I recommend the following portfolio for your
General Lee's Barbecue Huts
First General REIT
Western California Electirc
San Marcos Rapid Transit
Gala Apartment Partnership
Money Market Fund
All Saver's Certificate
The portfolio would have an expected return of $61,513.
As we also discussed, changing your maximum investment in Z Corporation stocks and bonds
would not affect your return.
By requiring that at least $2,000 be invested in the Money Market
Fund, your portfolio's return would drop $1.53 to $61,511.47.
If you reduce your amount
allowed to be invested in debt to $75,000, your portfolio's return would drop $20 to $61,493.
We are assuming that the estimated annual after-tax returns (EAATR) will remain as stated.
However, you voiced a concern over what would happen to the portfolio if some of the EAATR's
If General Lee's Barbecue Huts' return increased to 17.5%, your return would also
increase $400 to $61,913.
If the Money Market Fund EAATR reduces to 10%, the portfolio
return would fall $5 to $61,498.
If the Z Corporation Bonds' EAATR increases to 13%, your
portfolio would increase $87 to $61,600.
Please call my office at your convenience if you have any questions regarding the portfolio or if
you wish to invest.
Investment Advisor, People's Investment