Describe your optimal borrowing strategy

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Reference no: EM131866656

This is a Modeling problem for Operations Research.

Please Model and solve this problem on a piece of paper and show all work.

You are trying to minimize the amount that you are in debt from your living expenses while in college. You estimate that your expenses each month is $900.

You have a bank that you work with and they will always give you a loan at the start of any month. The loan can be for any value up to $4,000.

The loan costs an additional $100 for the paperwork to process the loan. Thus, you only get to use $3,900 from a S4,000 loan or $1,800 from a $1,900 loan.

You can assume that all of your budget money is spent at the beginning of the month (moved into a non interest bearing checking account. Any money that is left in the savings account over a month earns .1% interest. Any dollar borrowed costs 1% each month.

Write an IP to determine your optimal borrowing strategy to survive this year. Note: You only need this for 9 months. You will begin paying on this money after the school year is over.

Reference no: EM131866656

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