Excel Question

Problem 1: Based on chapter 12. Revised from Page 647 Problem 4 (5 Points)

Data File: No data fill.

Please work on the following questions.

Adirondack Savings Bank (ASB) has $2 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 banks 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.

How should the $2 Million be allocated to each loan to maximize total annual return? What is the projected total annual return? Provide a brief discussion of the solution.

Question A: List all the constraints applied to this problem.

Question B: How much should be invested in those three investment options respectively in order to maximize the total annual return?

Question C: How much is the maximum total annual return?

Name your solution Excel file: W11P1 Solution.xlsx