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Problem 2-25 (Algorithmic) George Johnson recently inherited a large sum of money; he wants to use a...

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Advance Math

Problem 2-25 (Algorithmic)

George Johnson recently inherited a large sum of money; he wantsto use a portion of this money to set up a trust fund for his twochildren. The trust fund has two investment options: (1) a bondfund and (2) a stock fund. The projected returns over the life ofthe investments are 8% for the bond fund and 20% for the stockfund. Whatever portion of the inheritance he finally decides tocommit to the trust fund, he wants to invest at least 40% of thatamount in the bond fund. In addition, he wants to select a mix thatwill enable him to obtain a total return of at least 5.5%.

  1. Formulate a linear programming model that can be used todetermine the percentage that should be allocated to each of thepossible investment alternatives. If required, round your answersto three decimal places.
    Let B=percentage of funds invested in the bond fund
    S=percentage of funds invested in the stock fund
    B+S
    s.t.
    BBond fund minimum
    B+SMinimum return
    B+SPercentage requirement
  2. Solve the problem. If required, round the answers to onedecimal place.

    Optimal solution: B = , S =

    Value of optimal solution is  % ????

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