Question

An individual will invest $100,000 in three

different stocks (A, B, C). The investor

requires that the amount invested in

Stock A be greater than or equal to the

sum of the amounts invested in Stock B

and Stock C. Stock A yields 8%, Stock B

yields 13%, and Stock C yields 15%.

How much money should be invested in

each stock to maximize the return?

Write the system of constraints and the

objective function. Use Excel Solver to

answer the question and indicate the

maximum return.

Answer 1

If a b c are the amounts we require

a+b+c=100000

a>=(b+c)

And we want to maximise 1.08a+1.13b+1.15c

Doing this we get:

Max value is 225500 for a=b=50000, c=0