A retired couple has 190,000 to invest to obtain annual income. They want some of it invested in safe certificates of deposit yielding 7%. The rest they want to invest in AA bonds yielding 10% per year. How much should they invest in each to realize exactly $17,200 per year ?
+118723 A retired couple has 190,000 to invest to obtain annual income. They want some of it invested in safe certificates of deposit yielding 7%. The rest they want to invest in AA bonds yielding 10% per year. How much should they invest in each to realize exactly $17,200 per year ?
First I am going to assume that you are not diminshing the capital. So the $17200 is made up entirely of the interest paid.
Let x dollars be invested at 7% and (190000-x) dollars be invested at 10%
10% of (190000-x) + 7% of x = 17200
0.1 (190000-x) +0.07x = 17200
19000 - 0.1x + 0.07x = 17200
1800 = 0.03x
x=60000
I am sure that you can finish it :))
