Question: As part of the settlement for a class action lawsuit, Hoxworth corporation must provide sufficient cash to make the following annual payments(in thousands of dollars)

Year             1 2           3 4 5   6

Payment    190 215 240 285 315 460

The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings(at 4% annually) and government securities, at prices and rates currently quoted in The Wall Street Journal.

Hoxworth wants to develop a plan for making the annual payments by investing in the following securities(par value = $1000). Funds not invested in these securities will be placed in savings.

Security current price Rate(%) Years to Maturity

1 $1055 6.750 3

2 $1000 5.125 4

Assume the interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to pay a trustee the amount that will be required to fund the plan.

a- Use a linear programming to find the minimum cash settlements necessary to fund the annual payments.

b- Formulate a linear programming model for the problem. You should show a complete LP model on a separate sheet, not on an Excel worksheet.

c- Solve the model using MS Excel Solver. (Include the worksheet and the answer sheet.)

Price: $2.99

Solution: The downloadable solution consists of 4 pages
Deliverable: Word Document