View the step-by-step solution to:

Question

This question was created from chapter4-Part1-spr14 https://www.coursehero.com/file/8881402/chapter4-Part1-spr14/

8881402-352447.jpeg

I need help with the question "How should the $2 million to be allocated to maximize the return" except I need to allocate $1.2 million instead of $2 million. I also need to know how to find the projected total annual return

8881402-352447.jpeg

Chapter 4 LP applications
Budget allocation #3
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 rate 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 will have $2 million 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.
Risk-free securities may not exceed 30% of the total funds available
Signature loans may not exceed 10% of the funds invested in loans.
Furniture loans plus other secured loans may not exceed the automobile loans.
Other secure loans plus signature loans may not exceed the funds invested in risk-free securities.
How should the $2 million be allocated to maximize return?

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes