Cornell University Loan Policy Linear Programming Worksheet

Question 1Goodlife Bank is formulating its loan policy for next year. The bank offers three types of
one-year bridging loans: education loans, home loans and car loans. The interest rate and
the bad-debt percentage for each loan type are as follows:
Loan type
Interest rate (per annum) Bad-debt percentage
For example, if a borrower obtains an education loan of $100, he needs to repay $104.5 to
the bank after one year. The bad debt percentage is the uncollectible loan amount divided by
the total loan amount. For example, 2.1% of the education loan amount is not recoverable. In
other words, every dollar lent out has a 2.1% probability of not returning to the bank.
Identify which of these three types of loans has the highest net return.
(10 marks)
To calculate the highest net return, the ROI of the loans is calculated
The bank decides to lend up to $9 million. To support the vision of a learning
society, at least $3 million will be allocated for education loans. In order to have a
diversified customer base, home loans need to account for at least 15% of total loans;
car loans need to be at least 40% of home loans. To keep the bank running smoothly,
the overall bad-debt percentage shall not exceed 1.25%. The bank wants to determine
how much loan amount to allocate for each loan type in order to maximise the bank’s
net return.
Develop the linear programming (LP) model for the problem. Please limit the
answer to within one page.
(30 marks)

Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.
WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!
👋 Hi, how can I help?