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Thread: Any ECON/Business majors here????????

  1. #1
    Freedom Soca Taliban's Avatar Soca Taliban is offline
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    Cool Any ECON/Business majors here????????

    I have a problem I'm trying to solve but I'm catching problems
    setting up the contraints. Once I get those correct, then solving
    it is no problem. Any takers?????

    Here is the problem:

    State Employee Credit Union (SECU) of Maryland is planning the allocation
    of funds for the upcoming year. SECI make four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments together with
    their annual rate of returns are as follows:

    TYPE OF LOAN/INVESMENT = ANNUAL RATE OF RETURN (%)
    Automobile loans = 8.5
    Furniture Loans = 10.2
    Other secured loans = 9.5
    Signature loans = 9.75
    Risk-free securities = 9.6

    - Assume that the firm has $6,500,000 available for investment during the upcoming year

    - State laws and credit union policies impose the following restrictions on the composition of the credit union's loans and investments:

    * Risk-free securities may not exceed 20% of the total funds available for investment
    * Signature loans may not exceed 10% of the funds invested in all loans for (automobile, furniture, other secured and signature loans)
    * Furniture loans plus other secured loans may not exceed the automobile loans
    * Other secured loans plus signature loans may not exceed the funds invested in risk-free securities.

    Okay here is what I have so far:
    Profit Max Formula = .085A + .102F + .095X + .0975 + 096R

    Constraints
    1A + 1F + 1X + 1S + 1R < 6,500,000
    0A + 0F + 0X + 0S + 1R < 1,300,000
    -.1A + -.1F -.1X + 1S -.1R < 0

    The last 2 constraints is where I'm stuck..
    Anybody could offer any help. 2 Free drink and roti fuh d winner!!

  2. #2
    Smarty Skirt Antigua Me Come Fram's Avatar Antigua Me Come Fram is offline
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    Like nobody taking you on. Which class is this?

  3. #3
    Freedom Soca Taliban's Avatar Soca Taliban is offline
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    Cool

    Quote Originally Posted by Antigua Me Come Fram View Post
    Like nobody taking you on. Which class is this?
    Quantitative methods and analysis.

  4. #4
    Smarty Skirt Antigua Me Come Fram's Avatar Antigua Me Come Fram is offline
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    Quote Originally Posted by Soca Taliban View Post
    Quantitative methods and analysis.
    OK I figured as much but I never took that class. I don't know if this will help but just by looking at it:

    F + X ≤ A

    and

    X + S ≤ R

    Just trying a thing.

  5. #5
    Registered User direct_effect is offline
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    ^^^ I woulda put the same thing too. For the part where they say that sig loans shouldn't exceed the total funds invested, u could use 6500000x/100 to represent the funds invested as long as u specify that x<100.

  6. #6
    Freedom Soca Taliban's Avatar Soca Taliban is offline
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    Cool

    Aight allyuh, thanks, lemmeh see what ah could come up with!

  7. #7
    Registered User trinidarkie is offline
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    Is this finance or math? Here is what i came up with, if yuh fail hard luck

    Constraints

    A + F + X + S + R <= 6,500,000 (don't knwo how to do the less than or equal to sign)
    R <= 1,300,000 (6,500,000*.2)
    S <= .1 (A + F + X + R)
    X + F <= A
    X + S <= R
    Last edited by trinidarkie; 05-02-2007 at 04:29 PM.

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