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An investor is considering three types of investments: a high risk venture into oil leases with...

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Basic Math

An investor is considering three types of investments: a highrisk venture into oil leases with a potential return of 15%, amedium risk investment in bonds with a 9% return, and a relativelysafe stock investment with a 5% return. He has $50,000 to invest.Because of the risk, he will limit his investments in oil leasesand bonds to 30% and his investments in oil leases and stock to50%. How much should he invest in each to maximize his return,assuming investment returns are as expected?

a. Define the variables

b. Clearly state the constraints (all inequalities) related tothe feasible region

c. State the objective function

d. Set up the initial simplex matrix needed to solve the linearprogramming problem using the Simplex Method

e. Perform all pivots necessary using row operations totransform the matrix until the solution is feasible

f. How much should he invest in each to maximize his return,assuming investment returns are as expected?

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