Pittsburg Savings & Loan makes four kinds of loans. These loans, with the yearly interest rate charged...

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Finance

Pittsburg Savings & Loan makesfour kinds of loans. These loans, with the yearly interest ratecharged to customers, are shown in the table below.
Type ofLoan                             Interest Charged (%, percent)
CommercialLoans                                          8
HomeMortgages                                 4
HomeImprovements                             6
Short-term revolvingloans                   10
The bank has $25 million in availablefunds. Its objective is to maximize yield on investment. The demandfor short-term revolving loans never exceeds $10 million. Alsothere are policies and regulations on loans:
a.    Home improvementloans cannot be higher than 40 percent of home mortgage loans.
b.    Commercial loanscannot be higher than 20 percent of the home mortgage loans.
c.    The bank mustinvest at least 50 percent of the loans outstanding (total loans)in mortgages.
Formulate this problem as an LP.

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Pittsburg Savings & Loan makesfour kinds of loans. These loans, with the yearly interest ratecharged to customers, are shown in the table below.Type ofLoan Interest Charged (%, percent)CommercialLoans 8HomeMortgages 4HomeImprovements 6Short-term revolvingloans 10The bank has $25 million in availablefunds. Its objective is to maximize yield on investment. The demandfor short-term revolving loans never exceeds $10 million. Alsothere are policies and regulations on loans:a. Home improvementloans cannot be higher than 40 percent of home mortgage loans.b. Commercial loanscannot be higher than 20 percent of the home mortgage loans.c. The bank mustinvest at least 50 percent of the loans outstanding (total loans)in mortgages.Formulate this problem as an LP.