An investment club has set a goal of earning 15% on the money it invests in stocks. The members are considering purchasing three possible stocks, with their cost per share (in dollars) and their projected growth per share (in dollars) summarized in the following table. (Let x = computer shares, y = utility shares, and z = retail shares.) Stocks Computer (x) Utility (y) Retail (z) Cost/share 30 44 26 Growth/share 6.00 6.00 2.40 (a) If they have $392,000 to invest, how many shares of each stock should they buy to meet their goal? (If there are infinitely many solutions, express your answers in terms of z as in Example 3.) (x, y, z) = ? (b) If they buy 700 shares of retail stock, how many shares of the other stocks should they buy? computer ? shares utility ? shares What if they buy 1400 shares of retail stock? computer ? shares utility ? shares (c) What is the minimum number of shares of computer stock they should buy? ? shares What is the number of shares of the other stocks in this case? utility ? shares retail ? shares (d) What is the maximum number of shares of computer stock they should purchase? ? shares What is the number of shares of the other stocks in this case? utility ? shares retail ? shares
An investment club has set a goal of earning 15% on the money it invests in stocks. The members are considering purchasing three possible stocks, with their cost per share (in dollars) and their projected growth per share (in dollars) summarized in the following table. (Let x = computer shares, y = utility shares, and z = retail shares.) Stocks Computer (x) Utility (y) Retail (z) Cost/share 30 44 26 Growth/share 6.00 6.00 2.40 (a) If they have $392,000 to invest, how many shares of each stock should they buy to meet their goal? (If there are infinitely many solutions, express your answers in terms of z as in Example 3.) (x, y, z) = ? (b) If they buy 700 shares of retail stock, how many shares of the other stocks should they buy? computer ? shares utility ? shares What if they buy 1400 shares of retail stock? computer ? shares utility ? shares (c) What is the minimum number of shares of computer stock they should buy? ? shares What is the number of shares of the other stocks in this case? utility ? shares retail ? shares (d) What is the maximum number of shares of computer stock they should purchase? ? shares What is the number of shares of the other stocks in this case? utility ? shares retail ? shares
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter2: Fundamental Economic Concepts
Section: Chapter Questions
Problem 4E
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Question
An investment club has set a goal of earning 15% on the money it invests in stocks. The members are considering purchasing three possible stocks, with their cost per share (in dollars) and their projected growth per share (in dollars) summarized in the following table. (Let x = computer shares, y = utility shares, and z = retail shares.)
Stocks | |||
---|---|---|---|
Computer (x) | Utility (y) | Retail (z) | |
Cost/share | 30 | 44 | 26 |
Growth/share | 6.00 | 6.00 | 2.40 |
(a) If they have $392,000 to invest, how many shares of each stock should they buy to meet their goal? (If there are infinitely many solutions, express your answers in terms of z as in Example 3.)
(b) If they buy 700 shares of retail stock, how many shares of the other stocks should they buy?
What if they buy 1400 shares of retail stock?
(c) What is the minimum number of shares of computer stock they should buy?
? shares
What is the number of shares of the other stocks in this case?
(d) What is the maximum number of shares of computer stock they should purchase?
? shares
What is the number of shares of the other stocks in this case?
(x, y, z) = ?
(b) If they buy 700 shares of retail stock, how many shares of the other stocks should they buy?
computer | ? shares |
utility | ? shares |
What if they buy 1400 shares of retail stock?
computer | ? shares |
utility | ? shares |
(c) What is the minimum number of shares of computer stock they should buy?
? shares
What is the number of shares of the other stocks in this case?
utility | ? shares |
retail | ? shares |
(d) What is the maximum number of shares of computer stock they should purchase?
? shares
What is the number of shares of the other stocks in this case?
utility | ? shares |
retail | ? shares |
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