Business, 05.07.2021 19:20 Emanuelle7474

A financial advisor at Diehl Investments identifies two companies that are likely in a takeover bid: Eastern Cable and Comswitch. Eastern Cable is a leading manufacturer of flexible cable systems used in the manufacturing industry and Comswitch is a new firm specializing in Digital Switching systems. Eastern Cable is currently trading at $40 a share and Comswitch at $25 a share. If the takeover occurs, the advisor estimates that the price of Eastern shares will increase to $55 per share and that of Comswitch to $43 a share. At this point in time, the financial advisor has identified ComSwitch as the higher risk alternative. Assume that a client indicated a willingness to invest a maximum of $50,000 in the two companies. The client wants to invest at least $15,000 in Eastern Cable and at least $10,000 in ComSwitch. Because of the higher risk associated with ComSwitch, the financial advisor has recommended that at most $25,000 should be invested in ComSwitch. a. Formulate a linear programming model that can be used to determine the number of shares of Eastern Cable and the number of shares of ComSwitch that will meet the investment constraints and maximize the total return for investment
b. Graph the feasible region.
c. Determine the coordinates of each extreme point.
d. Find the optimal solution.

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