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Business, 16.04.2020 00:44 cynthiagutierrez65

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 180 220 245 300 320 480 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 3.75% 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 $1065 6.25 3 2 $1000 5.225 4 Assume that 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. Use linear programming to find the minimum cash settlement necessary to fund the annual payments. Let F = total funds required to meet the six years of payments G1 = units of government security 1 G2 = units of government security 2 Si = investment in savings at the beginning of year i Note: All decision variables are expressed in thousands of dollars. If required, round your answers to four decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300)Min 1 Fs. t.1 F + -1.065 G1 + -1 G2 + - S1 = 180.0625 G1 + .05225 G2 + 1.0375 S1 + - S2 = 220.0675 G1 + .05225 G2 + 1.0375 S2 + - S3 = 2451.0675 G1 + .05525 G2 + 1.0375 S3 + - S4 = 3001.05525 G2 + 1.0375 S4 + - S5 = 3201.0375 S5 + 0 S6 = 480A. Round your answer to the nearest dollar. Current investment required $Investment in government security 1 $Investment in government security 2 $ Investment in savings for year 1 $Investment in savings for year 2 $Investment in savings for year 3 $Investment in savings for year 4 $Investment in savings for year 5 $Investment in savings for year 6 $B. Use the shadow price to determine how much more Hoxworth should be willing to pay now to reduce the payment at the beginning of year 6 to $400,000. Round your answer to the nearest dollar. ? $C. Use the shadow price to determine how much more Hoxworth should be willing to pay to reduce the year 1 payment to $150,000. Round your answer to the nearest dollar. Hoxworth should be willing to pay anything less than $? .D. Suppose that the annual payments are to be made at the end of each year. Reformulate the model to accommodate this change. Note: All decision variables are expressed in thousands of dollars. If required, round your answers to four decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) Min ()Fs. t.1)() F +() G1 +() G2 + ()S1 =()2) ()G1 + ()G2 + ()S1 +() S2 = ()3)() G1 +() G2 +() S2 +() S3 =()4)() G1 + ()G2 + ()S3 + ()S4 =()5)() G2 +() S4 + ()S5 =()6) ()S5 + ()S6 =()7) ()S6 + ()S7 =()How much would Hoxworth save if this change could be negotiated? Round your answer to the nearest dollar. $() Do ABCD, For D, answer all ().

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