Math 1324 Finite Math Project

Name: ____________________________________

This is an individual, optional, extra credit project for Math 1324, Finite Math, CRN 22258. If submitted for credit, it is due at the beginning of the class period on the last regularly scheduled class meeting day before the Final Examination period begins. That is, it is due at 12:00 pm on Monday, May 6, 2013. The solutions are to represent your individual effort. It is not a project to be completed in pairs or other groups or with the direct assistance of any tutor on these specific problems. You may ask for tutorial assistance on the general usage of Excel, if you choose to use it for the project. You may ask your instructor for assistance with Excel as it applies to the project. You may use your textbook and other reference material as desired. By writing your name above and submitting a document with this page included, you acknowledge, assent, and agree to abide by each and every one of the restrictions and guidelines specified herein. Be sure to include a signed copy of this page with your submission; otherwise the project will not be graded and counted for extra credit. You may earn up to 30 points to be applied to one of the major Chapter Tests. You must earn a minimum of 8 points on this project for it to be considered a relevant learning experience worthy of any extra credit points for tests. Be sure to show all of your work for every problem. To receive credit, each answer must be adequately supported with a logical progression of solution steps. An unsupported numerical answer is not sufficient. The problem descriptions follow. 1. Refinance Application 10 points for a complete, well documented solution. Ten years ago a person purchased a home for an agreed selling price of $234,401. The buyer paid 10% down and signed a 30-year mortgage for the balance of the purchase price at 12% compounded monthly. Interest rates have dropped since that time, and the owner wants to refinance the unpaid balance after the end of the tenth year (before the first payment of the 11th year is due). By signing a new 15-year mortgage at 5.1% compounded monthly, how much interest will refinancing save the homeowner? Assume the second loan runs to its maturity. 2. Mixture Blending Optimization 10 points for a conversion of the verbal description to a complete set of constraint equalities/inequalities and an objective function, together with the setup of the corresponding initial Simplex Tableau. An additional 10 points may be earned for a complete, correct, documented solution of the problem. A refinery company produces two grades of gasoline, regular and premium, by blending together three components: A, B, and C. Component A has an octane rating

of 90 and costs $28 a barrel. Component B has an octane rating of 100 and costs $30 a barrel. Component C has an octane rating of 110 and costs $34 a barrel. The octane rating for regular gasoline must be at least 95, and the octane rating for premium gasoline must be at least 105. Assume the octane rating of a blend is simply the proportional average of the octane ratings of its components. Regular gasoline sells for $38 a barrel, and premium gasoline sells for $46 a barrel. The company has available 40 thousand barrels of component A, 25 thousand barrels of component B, and 15 thousand barrels of component C. It must produce at least 30 thousand barrels of regular gasoline and 25 thousand barrels of premium gasoline to meet existing sales orders. How should the components be blended in each grade of gasoline to maximize profit? What is the maximum profit (accounting for the thousands of barrels)?