QUIF portfolio has $200,000 for investing in the year FY 2021-2022. After a detailed market analysis, the investor managers decided to go with the following funds for FY2021-2022.
|
Funds |
Project Annual Rate of Return |
|
Technology Funds |
14% |
|
Healthcare Funds |
12% |
|
Automobile Funds |
8% |
|
Government Bonds |
4% |
|
Index Fund |
10% |
Technology Funds and Healthcare Funds have high risks, so the investment in these funds can not exceed 60% of the total fund.
Government bonds should have at least 10% of total investment.
Because of government incentives, investment in automobile funds should be at least 25% of technology and index funds together.
- To maximize the total rate of return, how will the funds be allocated for FY2021-2022? Use linear programming model by creating an Excel Spreadsheet and use Excel Solver to find the answer.
- Run the sensitivity analysis and interpret the dual value for the total fund available to invest in the portfolio for FY2021-202
- Bonus Question: Interpret the reduced cost value for healthcare funds.
