A small bank has $1,000,000 in new funds that must be allocated to various loan types, including home loans, personal loans, and auto loans. The annual rate of return for each is 7% for home loans, 12% for personal loans, and 9% for auto loans. The bank’s planning committee has determined that at least 40% of the new funds must be allocated to home loans, and the amount allocated to personal loans must not exceed 60% of the amount allocated to automobile loans. Create and solve a linear programming model in Excel to help the bank maximize the total annual return.
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- A small bank has $1,000,000 in new funds that must be allocated to various loan types, including home loans, personal loans, and auto loans. The annual
rate of return for each is 7% for home loans, 12% for personal loans, and 9% for auto loans. The bank’s planning committee has determined that at least 40% of the new funds must be allocated to home loans, and the amount allocated to personal loans must not exceed 60% of the amount allocated to automobile loans. Create and solve a linear programming model in Excel to help the bank maximize the total annual return.
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- Bruin Properties is in escrow to buy a 175,000 square foot shopping center in Camarillo, California for $35,000,000. Bruin Properties can borrow $24,000,000 fixed rate fully amortizing over 30 years at a 6.0% annual interest rate with equal monthly payments of principal and interest or it can borrow $28,000,000 fixed rate fully amortizing over 30 years at a 7.0% annual interest rate with equal monthly payments of principal and interest. What is the incremental annual borrowing cost for the additional $4,000,000 loan amount if each loan would be outstanding for the full 30 year term? a.13.0% b.12.4% c.11.5% d. 7.0%Aventura Savings and Loan requires 15% down payment on a mortgage loan. What is the down payment needed to finance a $148,500 home?money borrowed for personal reasons; to be repaid within a specific time frame and with added interest money borrowed for the purchase of real estate; to be repaid within a specific time frame and with added interest money borrowed for business reasons; to be repaid within a specific time frame and with added interest money borrowed for the purchase of a vehicle; to be repaid within a specific time frame and with added interest : Business Loan :: Auto Loan :: Mortgage Loan :: Personal Loan 1 4 6. 8. 9. Finish Si
- A young computer engineer has $12,000 to invest and three different investment options (funds) to choose from. Type 1 guaranteed investment funds offer an expected rate of return of 7%, Type 2 mixed funds (part is guaranteed capital) have an expected rate of return of 8%, while an investment on the Stock Exchange involves an expected rate of return of 12%, but without guaranteed investment capital. Computer engineer has decided not to invest more than $2,000 on the Stock Exchange in order to minimize the risk. Moreover for tax reasons, she needs to invest at least three times more in guaranteed investment funds than in mixed funds. Assume that at the end of the year the returns are those expected; she is trying to determine the optimum investment amounts. (a) Express this problem as a linear programming model with two decision variables.(b) Solve the problem with the graphical solution procedure and define the optimum solution.Where a financial institution makes a loan commitment, the borrower, in drawing down on their loan commitment, causes increased cash flow needs by the DI to fund the loan commitments. There are three ways a DI can offset the effect of Asset-side liquidity risk such as drawing down of a loan commitment in all of the following sitiuations Except: a. Reduce excess cash reserves to minimum levels required to meet reserve requirements based on the decision made by management independant of regulatory requirements. b. Reduce balance sheet items such as retain earnings to the meet the minimum required capital levels. c. Taking offsetting measures such as borrowing funds or even purchasing funds on the money market. d. Reducing liquid type assets on their balance sheet such at T-bills by selling them.The following is an excerpt from a business plan: "To open our new upscale toy store, We R Toys, we require a total of $225,000. The owners will be providing $100,000 of this amount from their own savings, and their friends and families have promised an additional $25,000. Therefore, We R Toys requires a bank loan of $100,000." In which section of We R Toys' business plan would this information be found? O Executive Summary O Sales Strategies Market Analysis O Financial Projections O Funding Requirements
- The following information describes the accounting procedures at Soufian Sdn. Bhd. Soufian Sdn. Bhd. is a small construction company which processes its daily transactions manually. Soufian, a senior account executive is spending more money than he can afford. He is the authorized signatory on the company’s bank account and write cheques for himself, his accomplices and his creditors. Here, no one is reviewing the supporting documents or reconciling the bank statements. In addition, he has a complete control over the company’s computerized accounting system. Accordingly, because there was no oversight of his work, Soufian is brave enough to do absolutely nothing to conceal the irregularities on the records. An account clerk assists Soufian, but the clerk job is not requiring much attention, for example, only does filing and retrieving documents, answering phones, responding to emails and running errands. On the other hand, Soufian is occupying too much time with his work by not telling…Lorna owns a home that is worth $385,000. She has a mortgage with a balance of $112,000. Calculate her equity in the home. $497,000 $76,000 $273,000 $245,000Which of the following types of loans is a term loan where the funds are used to build a home A) 203(b) loan B) 203(k) loan C) Construction loan D) Home equity loan
- M-REITs, or mortgage REITs, primarily invest in real estate loans and mortgage-backed securities that are often below investment grade. When a mortgage REIT decided some years ago to re-securitize a substantial portion of its CMBS "BB" and "B" securities, it received surprisingly high investment grade ratings of "A" and "BBB" from Standard & Poor's on the new securities that were created from the cash flows of the underlying portfolio of non-investment grade rated securities. But when the financial markets began to fall a few months later, that mortgage REIT quickly went bankrupt and the value of its "A" and "BBB" investment grade rated re-securities fell substantially. The intended purpose of the ratings agencies is: To produce substantial profits for the rating agencies from the fees paid to them for giving higher ratings on investments than might otherwise be appropriate To help businesses and governments raise needed capital by providing them with the ratings they need to…Emily works for a small software company and oversees software quality assurance. The company recently developed an inventory control system for a national clothing manufacturer. The system gathers sales information on an hourly basis from clothing retailers nationwide. This information is then used by all departments (including the accounting, shipping, and ordering departments) to control the functions of the clothing manufacturer. Emily suspects that the inventory functions of the system are not sufficiently tested, although they have passed all their contracted (legal) tests. However, she is pressured by her employers to sign off on the software. Whilst she is only required to perform tests which have been agreed to in the original contract, her considerable experience in software testing has led her to be concerned over the quality of the system. Her employers say that they will go out of business if they do not deliver the software on time. Emily knows that if any section of…A UCLA student saved $100,000 for the down payment on a $1,000,000 one-bedroom, two-bathroom home in Encino, California. She can qualify for either a $900,000 fully amortizing 30-year first mortgage loan at a 4.75% annual interest rate from Wells Fargo Bank, or she can qualify for a $790,000 fully amortizing 30-year first mortgage loan at a 4.25% annual interest rate with a $110,000 fully amortizing 30-year second mortgage loan at an 8.00% annual interest rate from Citibank. What is the approximate effective annual interest rate on the combined first and second mortgage loan package from Citibank? a. 8.00% b. 4.25% c. 4.75% d. 6.15%