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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


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
Furniture Loans
Other secured loans
Signature loans
Risk-free securities
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?

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