Assignment task:
David has $90,000 that he wants to invest now to use the accumulation for purchasing a retirement annuity in five years. A financial advisor has offered four types of fixed-income investments, A, B, C, and D. Investments A and B are available at the beginning of each of the next five years. Each dollar invested in A at the beginning of a year returns $1.20 (a profit of $0.20) two years later, in time for immediate reinvestment. Each dollar invested in B at the beginning of a year returns $1.36 three years later. Investments C and D will each be available at one time in the future. Each dollar invested in C at the beginning of year 2 returns $1.66 at the end of year 5. Each dollar invested in D at the beginning of year 5 returns $1.12 at the end of year 5.
David needs to make a balloon payment on an existing loan, of $24,000, at the end of year 3. He wants to cover that payment out of these generated funds.
What are the decision, objective variables, and constraint equations?