Investment and loan planning

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Reference no: EM13917260

Investment and Loan Planning. The employee credit union at State University is planning the usage of funds for the coming year. The credit union makes four types of loans to its members. In addition, it invests in “risk-free” securities in order to stabilize income. The various revenue-producing investments together with annual rates of return are as follows: Automobile 8 Furniture 9 Other Secured Loans 11 Signature Loans 12 “Risk Free Securities 7 State laws and credit union policies impose the following restrictions on the composition of the credit union’s loans and investments: “Risk-Free” securities may not exceed 20% of the total funds. Signature loans may not exceed 20% of total loans Furniture loans plus “other secured loans” may not exceed 50% of the total of the three types of secured loans Signature loans plus “other secured loans” may not exceed the amount invested in “Risk-Free” securities. If the firm projects $1,000,000 available for loans and investments during the coming year, how should the funds be allocated to each of the investment alternatives in order to maximize total annual return? Total Annual Return = $ Hint: Total Return is Between $87600 and $88800 Amount invested in Automobile loans = $ Amount invested in Furniture Loans = $ Amount invested in Other Secured Loans = $ Amount invested in Signature Loans = $ Amount invested in “Risk Free” Securities = $

Reference no: EM13917260

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