A finance company has a total of $25 million earmarked for homeowner and auto loans. On the average, homeowner loans have a 8% annual rate of return, whereas auto loans yield a 12% annual rate of return. Management has also stipulated that the total amount of homeowner loans should be greater than or equal to 4 times the total amount of automobile loans. Determine the total amount of loans of each type the company should extend to each category in order to maximize its returns.
$ __________ million in homeowner loans, $ __________ million in auto loans
What are the optimal returns? (Round your answer to the nearest hundredth, if necessary).
$ __________ million

Question

Quizplus · Accepted Answer

The Answer of A finance company has a total of $25 million earmarked for homeowner and auto loans. On the average, homeowner loans have a 8% annual rate of return, whereas auto loans yield a 12% annual rate of return. Management has also stipulated that the total amount of homeowner loans should be greater than or equal to 4 times the total amount of automobile loans. Determine the total amount of loans of each type the company should extend to each category in order to maximize its returns.
$ __________ million in homeowner loans, $ __________ million in auto loans
What are the optimal returns? (Round your answer to the nearest hundredth, if necessary).
$ __________ million

A Finance Company Has a Total of $25 Million Earmarked