Chapter 11.2, Problem 87AE

Financial Planning Three retired couples each require an additional annual income of $\$2000$ per year. As their financial consultant, you recommend that they invest some money in Treasury bills that yield $7\%$, some money in corporate bonds that yield $9\%$, and some money in “junk bonds” that yield $11\%$. Prepare a table for each couple showing the various ways that their goals can be achieved:

a. If the first couple has $\$20,000$ to invest.

b. If the second couple has $\$25,000$ to invest.

c. If the third couple has $\$30,000$ to invest.

d. What advice would you give each couple regarding the amount to invest and the choices available?

[Hint: Higher yields generally carry more risk.]