Sansuit Investments is deciding on future investment for the coming two years and is considering four bonds. The investment details for the next two years are given in the table below. $\begin{array}{ccc}
\text { Investment Requirements (\$) }\
& \text { Year 1 } & \text { Year 2 } \
\hline \text { Bond A } & 25,000 & 30,000 \
\text { Bond B } & 15,000 & 21,000 \
\text { Bond C } & 8000 & 9500 \
\text { Bond D } & 10,000 & 7000
\end{array}$

The net worth of these four bonds at maturity is $60,000, $40,000, $25,500, and $18,000, respectively. The firm plans to invest $35,000 and $62,000 in Year 1 and Year 2, respectively.
a. Develop and solve a binary integer programming model for maximizing the return on investment (in dollars) assuming that only one of the bonds can be considered. How much money is invested? What is the return on investment (in dollars)?
b. Suppose the investment has to be made on Bond B, and only two of the four bonds can be considered for investment. Modify your formulation from Part (a) to reflect this new situation. How much money is invested? What is the return on investment (in dollars)? Based on the ratio of return vs. investment, which of these two options would you recommend?

Question

Sansuit Investments is deciding on future investment for the coming two years and is considering four bonds. The investment details for the next two years are given in the table below. $\begin{array}{ccc} 
\text { Investment Requirements (\$) }\
& \text { Year 1 } & \text { Year 2 } \
\hline  \text { Bond A } & 25,000 & 30,000 \
\text { Bond B } & 15,000 & 21,000 \
\text { Bond C } & 8000 & 9500 \
\text { Bond D } & 10,000 & 7000
\end{array}$ ​
​
The net worth of these four bonds at maturity is $60,000, $40,000, $25,500, and $18,000, respectively. The firm plans to invest $35,000 and $62,000 in Year 1 and Year 2, respectively. 
a. Develop and solve a binary integer programming model for maximizing the return on investment (in dollars) assuming that only one of the bonds can be considered. How much money is invested? What is the return on investment (in dollars)?
b. Suppose the investment has to be made on Bond B, and only two of the four bonds can be considered for investment. Modify your formulation from Part (a) to reflect this new situation. How much money is invested? What is the return on investment (in dollars)? Based on the ratio of return vs. investment, which of these two options would you recommend?
​

Quizplus · Accepted Answer

The Answer of Sansuit Investments is deciding on future investment for the coming two years and is considering four bonds. The investment details for the next two years are given in the table below. $\begin{array}{ccc} 
\text { Investment Requirements (\$) }\
& \text { Year 1 } & \text { Year 2 } \
\hline  \text { Bond A } & 25,000 & 30,000 \
\text { Bond B } & 15,000 & 21,000 \
\text { Bond C } & 8000 & 9500 \
\text { Bond D } & 10,000 & 7000
\end{array}$ ​
​
The net worth of these four bonds at maturity is $60,000, $40,000, $25,500, and $18,000, respectively. The firm plans to invest $35,000 and $62,000 in Year 1 and Year 2, respectively. 
a. Develop and solve a binary integer programming model for maximizing the return on investment (in dollars) assuming that only one of the bonds can be considered. How much money is invested? What is the return on investment (in dollars)?
b. Suppose the investment has to be made on Bond B, and only two of the four bonds can be considered for investment. Modify your formulation from Part (a) to reflect this new situation. How much money is invested? What is the return on investment (in dollars)? Based on the ratio of return vs. investment, which of these two options would you recommend?
​

Sansuit Investments Is Deciding on Future Investment for the Coming