Reference no: EM13833644
It is January 1, 2011. Beth is the finance manager at the Glop Foundation whose sole asset is $75,000 in cash in its checking account. The Foundation must make the following cash payments for the next three years:
2011: $25,000 2012: $25,500 2013: $26,000
Cash required for a year must be withdrawn from the bank and set aside at the beginning of that year. The Foundation is scheduled to shut down on January 1, 2014. On that date, all cash left over in its checking account will be withdrawn and paid to the Foundation's beneficiaries.
In addition to the checking account, the Foundation's bank offers two savings vehicles: a 2-year Certificate of Deposit (or CD) paying 3% interest per year and a 3-year CD paying 5% interest per year. Each CD can be purchased in any amount. Neither CD permits early withdrawal. Any cash that is not invested in the CD's on January 1, 2011, is left in the checking account that pays 2% interest per year. Interest (from the checking account and from the CDs) is deposited in the Foundation's checking account on January 1 of each year and is available for the Foundation's cash requirements for that year. For simplicity assume the checking account interest is paid at the end of the year balance.
Beth would like to develop a financing plan that maximizes the amount that can be paid to the Foundation's beneficiaries on January 1, 2014, while meeting the Foundation's payment requirements for the next three years. Develop a linear optimization model to accomplish this objective.
- Specify the decision variables.
- Specify the objective (as a function of the decision variables and/or intermediate variables).
- Specify the constraints (as a function of the decision variables and/or intermediate variables).
- Specify all intermediate variables (if any).
Implement your model in Excel. What is the optimal investment strategy and how much can the Foundation's beneficiaries expect to get paid on January 1st 2014. Include Exhibit 1-1 of your implemented model that is clearly labelled (with row and column headings) and shows the formulas.
|
What is the market value of the corner market
: A year ago, you deposited $40000 into a retirement savings account at a fixed rate of 5.5 percent. Today, you could earn a fixed rate of 6.5 percent on a similar type account. However, your rate is fixed and cannot be adjusted. How much less could yo..
|
|
What is coefficient of static friction
: What is coefficient of static friction
|
|
The jackson engineering company has a training program
: The Jackson Engineering Company has a training program designed to upgrade the supervisory skills of production-line supervisors. Because the program is self-administered, supervisors require different numbers of hours to complete it. A study of pa..
|
|
Western clothing company produces denim jeans
: 1) Western Clothing Company produces denim jeans. Each month the company incurs a fixed cost of $10,000 and variable cost of $8 per pair of jeans. Demand for the jeans depends on the price (P) according to the following relationship: Demand = 1,500 -..
|
|
The foundation is scheduled
: Cash required for a year must be withdrawn from the bank and set aside at the beginning of that year. The Foundation is scheduled to shut down on January 1, 2014. On that date, all cash left over in its checking account will be withdrawn and paid to ..
|
|
Explain what strategies the players used
: What strategies the players used, and what they might have used to get the best outcome for themselves;
|
|
Draw the corresponding ladder logic diagram
: Draw the corresponding ladder logic diagram - Provide a detailed description of the program functions, rung by rung.
|
|
Evaluating the value of the balanced scorecard
: Write a paper evaluating the value of the balanced scorecard as a tool for assessing and improving organizational performance in a health care organization
|
|
Reporting abstinence or low levels of alcohol consumption
: Your colleagues conducted a cohort study to examine the association between alcohol consumption and heart disease. The risk ratio obtained was 9.2, when comparing those reporting high levels of alcohol consumption with those reporting abstinence or l..
|