Math Problem Statement

A pension fund manager decides to invest a total of at most ​$40 million in U.S. Treasury bonds paying 6​% annual interest and in mutual funds paying 9​% annual interest. He plans to invest at least ​$5 million in bonds and at least ​$15 million in mutual funds. Bonds have an initial fee of​ $100 per million​ dollars, while the fee for mutual funds is​ $200 per million. The fund manager is allowed to spend no more than ​$7000 on fees. How much should be invested in each to maximize annual​ interest? What is the maximum annual​ interest? \

Solution

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Math Problem Analysis

Mathematical Concepts

Linear Programming
Optimization

Formulas

Objective Function: Maximize Interest = 0.06x + 0.09y
Fee Constraint: 100x + 200y ≤ 7000
Investment Constraints: x + y ≤ 40, x ≥ 5, y ≥ 15

Theorems

Linear Programming (Optimization) Theorem

Suitable Grade Level

College-Level (Mathematics or Economics)