Precalculus Enhanced with Graphing Utilities
Precalculus Enhanced with Graphing Utilities
6th Edition
ISBN: 9780321795465
Author: Michael Sullivan, Michael III Sullivan
Publisher: PEARSON
Question
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Chapter A.8, Problem 17AYU
To determine

To find: How much money should betsy invest in each to realize exactly $6000 in interest per year.

Expert Solution & Answer
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Answer to Problem 17AYU

Invest $31250 bonds and $18750 bonds in CD.

Explanation of Solution

Given:

Betsy, a recent retiree, requires $6000 per year in extra income. She has $50000 to invest and can invest in B-rated bonds paying 15% per year or in a certificate of deposit paying 7% per year.

Calculation:

Clearly,

X + Y = 50,000, Y = 50000  X and 0.15x + 0.07y = 6000

Therefore, 0.15x + 0.07( 50000  X ) = 6000 .

So, X = 31250 and Y = 18750 .

Therefore invest $31250 bonds and 18750 bonds in CD.

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