Question

The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with annual rates of return are as follows:Type of Loan/Investment Annual Rate of Return (%)Automobile loans 8Furniture loans 10Other secured loans 11Signature loans 12Risk-free securities 9The credit union will have $2 million available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments.

Answer 1

Answer:

Check the explanation

Explanation:

To solve the problem, formulate the spreadsheet as shown below: check attached imaged 1

Now, setup solver with Objective and constraints, as shown below: check attached imaged 2

Now, click 'Solve' to get the resultant Table, as shown below: check attached imaged 3

Now, interpret all the attached spreadsheet images to get the results of the asked questions.

The allocation of $2 million to each of the loan/investment alternatives to maximize total annual return is as tabulated below:

Type of Loan/Investment                 Fund Allocation per Loan ($)

Automobile loans                                              667,500

Furniture loans                                                  332,500

Other secured loans                                         335,000

Signature loans                                                 165,000

Risk-free securities                                           500,000

The Total Projected Annual return is $188,300