Management Science Assignment
Assume you have $X000 (X thousand dollars) to invest over the next seven years. At the beginning of each year you can invest money in one or three-year time deposits. The bank pays 1 percent interest on one-year deposits and 4 percent (total) on three-year time deposits. In addition, Royal Bank of Canada will offer two year certificates starting at the beginning of the third year. This investment in RBC will return 2.75 percent (total). If you invest your money that is available every year, formulate a linear programming to maximize your total cash on hand at the end of the 7th year.
A: Suppose X is the sum of your student ID digits. Moreover, assume that you can invest at the beginning of each year any value in the available investment options. Define decision variables, objective function, and constraints for your linear programming model.
B: Solve your investment LP model using Excel Solver and interpret your investment plan.
C: Assume the two-year RBC deposit starts at the beginning of the fifth year. What would be the corresponding change in your model formulated in Part A?