Construct mathematical model

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Mathematical model in in excel

Shawn has a total of $200,000 to invest in three types of mutual funds: growth, balanced, and income funds. Growth funds have a rate of return of 12% per year, balanced funds have a rate of return of 10% per year, and income funds have a rate of return of 6% per year. The growth, balanced, and income funds are assigned risk factors 0.1, 0.06, and 0.02, respectively. Shawn has decided that at least half of his total portfolio is to be in income finds and at least a quarter of it in balanced funds. He also decided that the average risk factor for his investment should not exceed 0.05. Determine how much he should invest in each type of fund in order to maximize return on his investment.

(Hint: The average risk factor for the investment is given by 0.1x + 0.06y + 0.02z + 0.05(x + y + z) .)

Construct mathematical model, use Excel to solve this problem, and draw the appropriate conclusion.

Reference no: EM13843163

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