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Elementary,Middle School,High School,College,University,PHD
| Teaching Since: | May 2017 |
| Last Sign in: | 409 Weeks Ago, 1 Day Ago |
| Questions Answered: | 66690 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Dan Boyd is a financial planner trying to determine how to invest $100,000 for one of his clients. The cash flows for the five investments under consideration are summarized in the following table:

For example, if Dan invests $1 in investment A at the beginning of year 1, he will receive $0.45 at the beginning of year 2 and another $1.05 at the beginning of year 3. Alternatively, he can invest $1 in investment B at the beginning of year 2 and receive $1.30 at the beginning of year 4. Entries of “0.00” in the preceding table indicate times when no cash in-flows or out-flows can occur. The minimum required investment for each of the possible investments is $50,000. Also, at the beginning of each year, Dan may also place any or all of the available money in a money market account that is expected to yield 5% per year. How should Dan plan his investments if he wants to maximize the amount of money available to his client at the end of year 4?
a. Formulate an ILP model for this problem.
b. Create a spreadsheet model for this problem and solve it using Solver.
c. What is the optimal solution?
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