A financier plans to invest up to 500000 in two projects Pr

A financier plans to invest up to $ 500,000 in two projects. Project A yields in return of 90 % on the investment of x dollars, whereas project 0 yields a return of 16 % in the investment of y dollars. Because the investment in project should not exceed 40 % of the total investment. How much should the financier invest in each project in order to maximize the return on her investment? What is the maximum return?

Solution

step-1:To find the values of x and y:

Here the Total Investment amout available = 500K dollars

He invested x dollars in project A and got an yield of 9%.

He invested y dollars in project B and got an yield of 16%.

And also sum of investments in project A and project B is given by

x + y = $500K ---------->(1)

It is given that Investment in project B doesn\'t exceed 40% of total investment.

That means....

y <= 40% OF Total Investment available

y <= 40%($500K)

y <= $200K

using y value in equation(1) we get,,

x + y = $500K

x + $200k = $500K

x = $300K

Hence

(x, y) = ($300K, $500k)

step-2:To find the Maximum yield of return:

And the maximum return is given by

maximum return = 9%(x) + 16%(y)

maximum return = 9%($300K) + 16%($200K)

maximum return = $27K + $32K

maximum return = $59K