401(k) RETIREMENT PLANS Three network consultants Alan, Maria and Steven, each received a year-end bonus of
The returns of the three funds after one year are given in the matrix.
Which employee realized the best return on his or her investments for the year in question? The Worst return?
Want to see the full answer?
Check out a sample textbook solutionChapter 2 Solutions
Finite Mathematics for the Managerial, Life, and Social Sciences
- Jerry has been promoted to the position of regional sales manager for Marlin Enterprises. As a perk of the new position, Jerry has been offered the opportunity to enroll in a corporate travel club. Members of the travel club pay a fixed annual membership fee in exchange for, among other benefits, the club reimbursing some or all of their personal travel expenses. Jerry's estimate of potential travel expenses in the next year is shown in the table below. Travel expenses ($1000s) Probability 0 44.31% 1.71 22.00% 2.94 4.17 5.4 5.16% 6.63 3.09% 7.86 9.09 2.07% 1.41% 13.64% 8.32% Jerry is considering whether to enroll in the organization's travel club. There are three alternatives for Jerry to consider. Option 1: Full Travel Membership Annual membership fee of $2,925 and reimburses 100% of any travel expenses incurred Option 2: VIP Travel Membership Annual membership fee of $855 and reimburses the portion of travel expenses that exceed $2,525. (For example, if travel…arrow_forwardGeorge Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment options: (1) a bond fund and (2) a stock fund. The projected returns over the life of the investments are 8% for the bond fund and 20% for the stock fund. Whatever portion of the inheritance George finally decides to commit to the trust fund, he wants to invest at least 40% of that amount in the bond fund. In addition, he wants to select a mix that will enable him to obtain a total return of at least 5.5%. Formulate a linear programming model that can be used to determine the percentage that should be allocated to each of the possible investment alternatives. If required, round your answers to three decimal places. Let B = percentage of funds invested in the bond fund S = percentage of funds invested in the stock fund Max 0.08 B + 0.20 S    s.t.        1B   ≥ .................. Bond…arrow_forwardGeorge Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment options: (1) a bond fund and (2) a stock fund. The projected returns over the life of the investments are 8% for the bond fund and 20% for the stock fund. Whatever portion of the inheritance George finally decides to commit to the trust fund, he wants to invest at least 40% of that amount in the bond fund. In addition, he wants to select a mix that will enable him to obtain a total return of at least 5.5%. Formulate a linear programming model that can be used to determine the percentage that should be allocated to each of the possible investment alternatives. If required, round your answers to three decimal places. Let B = percentage of funds invested in the bond fund S = percentage of funds invested in the stock fund Solve the problem using the graphical solution procedure. If required, round the…arrow_forward
- A building company plans to build a new warehouse. The cost of building the warehouse is an initial investment of 1500 thousand dollars, together with a further 250 thousand dollars at the end of each of the next two quarters. The building company will need to cover quarterly operating cost of 120 thousand dollars at the end of each of the next two quarters (first and second). After completion of the construction by the end of the second quarter, the warehouse will be sold for 2.5 million dollars. Assuming that the annual interest rate is 4% compounded annually, find: (1) The present value of the building costs; (2) The present value of the operating costs; (3) The present value of the revenue; and (4) The internal rate of return of the project. (5) Do you think the company should carry out this project? Give your reason(s).arrow_forwardAdirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 5% for home loans, 13% for personal loans, and 7% for automobile loans. The bank's planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans. (a) Formulate a linear programming model that can be used to determine the amount of funds ASB should allocate to each type of loan to maximize the total annual return for the new funds. If the constant is "1" it must be entered in the box. If your answer is zero enter "0". Let H = amount allocated to home loans P = amount allocated to personal loans A = amount allocated to automobile loans Маx H + P + s.t. H + A 2 Minimum Home Loans P + AS Personal Loan…arrow_forwardAdirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 6% for home loans, 10% for personal loans, and 11% for automobile loans. The bank's planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans. (a) Formulate a linear programming model that can be used to determine the amount of funds ASB should allocate to each type of loan to maximize the total annual return for the new funds. If the constant is "1" it must be entered in the box. If your answer is zero enter "0". Let H = amount allocated to home loans P = amount allocated to personal loans A = amount allocated to automobile loans Max s.t. Home Personal Automobile H + H + H + % H + P + P + P + P + (b)…arrow_forward
- An investment broker wants to invest up to $20,000. She can invest in two mutual funds based on their yearly average return for the 5 years ending December 31, 2009: the Franklin Natural Resources fund yielding 10% and the Oppenheimer Developing Markets A fund yielding 15%. She wants to invest at least $5000 in the Franklin Natural Resources fund and no more than $8000 in the Oppenheimer Developing Markets A fund. How much should she invest in each type of fund to maximize her return?arrow_forwardAdirondack Savings Bank (ASB) has $1 million in new funds that must be allocated to home loans, personal loans, and automobile loans. The annual rates of return for the three types of loans are 7% for home loans, 12% for personal loans, and 9% for automobile loans. The bank’s planning committee has decided that at least 40% of the new funds must be allocated to home loans. In addition, the planning committee has specified that the amount allocated to personal loans cannot exceed 60% of the amount allocated to automobile loans. Assume that ASB has the original $1 million in new funds available and that the planning committee has agreed to relax the requirement that at least 40% of the new funds must be allocated to home loans by 1%. How much would the annual return change? How much would the annual percentage return change? Discuss. *arrow_forwardYou have ​$750,000 in an IRA​ (Individual Retirement​ Account) at the time you retire. You have the option of investing this money in two​ funds: Fund A pays 5.1​% annually and Fund B pays 7.6​% annually. How should you divide your money between Fund A and Fund B to produce an annual interest income of ​$52,000​?    You should invest ​$ in Fund A and ​$ in Fund B.arrow_forward
- Discrete Mathematics and Its Applications ( 8th I...MathISBN:9781259676512Author:Kenneth H RosenPublisher:McGraw-Hill EducationMathematics for Elementary Teachers with Activiti...MathISBN:9780134392790Author:Beckmann, SybillaPublisher:PEARSON
- Thinking Mathematically (7th Edition)MathISBN:9780134683713Author:Robert F. BlitzerPublisher:PEARSONDiscrete Mathematics With ApplicationsMathISBN:9781337694193Author:EPP, Susanna S.Publisher:Cengage Learning,Pathways To Math Literacy (looseleaf)MathISBN:9781259985607Author:David Sobecki Professor, Brian A. MercerPublisher:McGraw-Hill Education