Posted: April 19th, 2021
A bank has set aside a maximum of $25 million for commercial and home loans. Every million dollars in commercial loans requires 2 lengthy application forms, while every million dollars in home loans requires 3 lengthy application forms. The bank cannot process more than 72 application forms at this time. The bank’s policy is to loan at least four times as much for home loans as for commercial loans. Because of prior commitments, at least $10 million will be used for these two types of loans. The bank earns 10% on commercial loans and 12% on home loans. What amount of money should be allotted for each type of loan to maximize the interest income?
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