Marsha Holmes earns 55000 per year and has 9000 available to

Marsha Holmes earns $55,000 per year and has $9,000 available to invest in a portfolio. Her investment alternatives and their expected returns are shown in the table below:

Marsha’s investment goals are as follows and can be ranked according to the weights shown in parenthesis. Which investments should be included in her portfolio, and how much should she invest in each?
Goal 1 (25) Invest all funds available
Goal 2 (20) Maximize the total annual return in dollars, with a target of $1,000
Goal 3 (15) Invest at least 3% of salary in employer’s retirement plan
Goal 4 (15) Invest at least 10% of the total investment in the money market
Goal 5 (10) Invest at most 25% of the total investment in retirement plans
Goal 6 (10) Invest at least 50% of the total investment in non-retirement plans
Goal 7 (5) Invest at most 50% of the total investment in mutual funds

Expected Return 3.5% 4.5% 80% 7.0% Investment Description IRA Retirement Employer\'s retirement plan Deferred income (retirement) Utility mutual fund Liberty Mutual Fund Money market 5.5%

Solution

Answer:

any of the provided alternatives can not provide the return of$1000 on the investment of $9000.

the reason is that, the maximum return providing instrument is retired plans at 8% per annum. even if we invest total amounts in it, we may receive only $720 return (9000*0.08= $720)