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Business Math : Linear Programming - Investment Problem

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An investor has $60,000 to invest in a CD and mutual fund. How much should be invested in CD's, and how much in the mutual fund to maximize return? This is a linear programming problem on investing.

For the following linear programing problem, define variables, write the objective function, and all constraints. Then solve the problem. An investor has $60,000 to invest in a CD and a mutual fund. The CD yields 5%, and the mutual fund yields 9%. The mutual fund requires a minnimum investment of $10,000, and the investor requires that exactly twice as much should be invested in CD's as in the mutual fund. How much should be invested in CD's and how much in the mutual fund to maximize the return? What is the maximum return?

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Solution Summary

Linear programming is used to define constraints and calculate the maximum return on an investment.

Solution Preview

First you need to define the function for return. Let x be investment in CD and y in mutual funds.

Return = 0.05*x + 0.09*y//Objective Function

with ...

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