An investor wants to determine how much interest he must earn to be able to make the payments on a 10-year mortgage which has increasing annual payments. The problem is summarized in the accompanying spreadsheet. The investor has enough money to make an initial investment of $9,000 and hopes he can earn 12%, compounded quarterly, on his investments. He would like to know how low his annual return can be and still allow him to make his payments from interest income. What constraint must be entered in the Risk Solver Platform (RSP) task pane?
A)$D$7:$D$16 $\le$ $E$7:$E$16
B)$C$7:$D$16 $\ge$ $E$7:$E$16
C)$C$7:$C$16 $\ge$ $E$7:$E$16
D)$D$7:$D$16 $\ge$ $E$7:$E$16

Question

An investor wants to determine how much interest he must earn to be able to make the payments on a 10-year mortgage which has increasing annual payments. The problem is summarized in the accompanying spreadsheet. The investor has enough money to make an initial investment of $9,000 and hopes he can earn 12%, compounded quarterly, on his investments. He would like to know how low his annual return can be and still allow him to make his payments from interest income. What constraint must be entered in the Risk Solver Platform (RSP) task pane? 
A)$D$7:$D$16 $\le$ $E$7:$E$16 
B)$C$7:$D$16 $\ge$ $E$7:$E$16 
C)$C$7:$C$16 $\ge$ $E$7:$E$16 
D)$D$7:$D$16 $\ge$ $E$7:$E$16

Quizplus · Accepted Answer

The constraint for the problem is the amount of interest earned, which is represented by the range D7:D16. The investor needs to earn enough interest to cover the increasing annual payments, which are in the range E7:E16. Therefore, the constraint should be that the sum of the interest earned in range D7:D16 must be greater than or equal to the sum of the annual payments in range E7:E16. This can be expressed as: $D$7:$D$16 F1F1F1S1≥F1F1F10 $E$7:$E$16. Option D is the only one that includes this constraint.

An Investor Wants to Determine How Much Interest He Must ≤\le≤

An Investor Wants to Determine How Much Interest He Must $\le$