Investment alternatives to maximize total annual return

Assignment Help Operation Management

Reference no: EM13902307

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 rates of return are as follows: Type of Loan/Investment Annual Rate of Return (%) Automobile loans 8 Furniture loans 9 Other secured loans 10 Signature loans 11 Risk-free securities 9 The credit union will have $1.9 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 35% of the total funds available for investment.

• Signature loans may not exceed 12% of the funds invested in all loans (automobile, furniture, other secured, and signature loans).

• Furniture loans plus other secured loans may not exceed the automobile loans.

• Other secured loans plus signature loans may not exceed the funds invested in risk-free securities.

How should the $1.9 million be allocated to each of the loan/investment alternatives to maximize total annual return? Type of Loan/Investment Fund Allocation Automobile loans $ Furniture loans $ Other secured loans $ Signature loans $ Risk-free securities $ What is the projected total annual return? Annual Return = $

Reference no: EM13902307

Questions Cloud

How about through discrimination or polluting environment : Does Friedman believe that business should make as much profit as possible, even if through fraud and deception? How about through discrimination or polluting the environment? Should a firm embrace value creation for transient shareholders seeking sh..

Optimal shipping strategy to minimize total shipping cost : A company can ship its product from any of its three factories, F1, F2, and F3, to any of its retail outlets, R1, R2, and R3. The capacity, demand, and shipping cost information is provided as follows: The company wants to come up with an optimal shi..

Kind of ethical-social and political issues : Search the ITT Tech Virtual Library and find an article detailing how an organization is using a knowledge management system to make better business decisions. What kind of ethical, social, and political issues are raised by information systems?

Evaluation of objectives in employees performance evaluation : Do you think evaluations of values should revieve equal, more, or less weight that evaluation of objectives (or that the employee accomplished) in employees' performance evaluation. Why?

Investment alternatives to maximize total annual return : 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. How s..

What contract issues are involved : Erwick Construction Company contracted to build a house for Charles. The specifications called for the use of Karlene Pipe for all plumbing. Erwick, however, got a better price on Boynton Pipe and substituted the higher quality Boynton Pipe for Karle..

Production smoothing-kanban and misc issues : Toyota Georgetown (a.k.a. Toyota Motor Manufacturing, Kentucky or simply TMMK) has two mixed model production lines each producing over two eight-hour shifts per day (with 480 minutes of working time per shift per production line), for five days per ..

Explanation of porters four competitive strategies : Give an explanation of Porter's four competitive strategies. A brief explanation of how competitive strategy determines value chain structure. Identify and discuss the competitive strategy that the organization you researched utilizes in order to dif..

Product manager responsible for horrible product failure : You are the product manager responsible for a horrible product failure, but in your wisdom, you are evaluating why the product failed. What factors would you consider in your evaluation? What actions could you have taken to prevent the failure? Does ..

User Account

All Pages