Michael Has Decided to Invest $40,000 in Three Types of Funds

question 35

Essay

Michael has decided to invest $40,000 in three types of funds. Fund A has projected an annual return of 8 percent, Fund B has projected an annual return of 10 percent, and Fund C has projected an annual return of 9 percent. He has decided to invest no more than 30 percent of the total amount in Fund B and no more than 40 percent of the total amount in Fund C.
a. Formulate a linear programming model that can be used to determine the amount of investments Michael should allocate to each type of fund to maximize the total annual return.
b. How much should be allocated to each type of fund? What is the total annual return?

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Definitions:

Ratification

The act of formally confirming or approving an agreement or act, making it officially valid.

Void

Refers to a legal declaration that an agreement or transaction is null and has no legal effect.

Mentally Impaired

Describes a condition where an individual's cognitive, emotional, or social abilities are significantly reduced compared to normative levels, potentially impacting their decision-making capacity.

Ratified

An action making an agreement officially valid after all parties involved have given their formal approval.