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:

Life Satisfaction

A measure of how people evaluate their life as a whole rather than their current feelings, reflecting a person's overall sense of well-being and contentment with life.

Baseline

The initial set of conditions or data used as a reference point for comparison in experimental observations or statistical analysis.

Job Loss

The event of losing one's employment, which can result from various factors including economic downturns, organizational restructuring, or performance issues.

Reemployment

The process of gaining new employment after losing a job, significant for its impact on an individual's financial stability and psychological well-being.