J ames Judson is the financial manager in charge of the company pension fund at Armco Incorporated. James knows that the fund must be sufficient to make the payments listed in Table 4.10. Each payment...

J ames Judson is the financial manager in charge of the company pension fund at Armco Incorporated. James knows that the fund must be sufficient to make the payments listed in Table 4.10. Each payment must be made on the first day of each year. James is going to finance these payments by purchasing bonds. It is currently January 1, 2008, and three bonds are available for immediate purchase. The prices and coupons for the bonds are as follows. (All coupon payments are received on January 1 and arrive in time to meet cash demands for the date on which they arrive.)

Objective To develop an LP spreadsheet model that relates initial allocation of money and bond purchases to future cash availabilities, and to use Solver to minimize the initialize allocation of money required to meet all future pension fund payments.