SOLUTION: You have ​$500,000 in an IRA​ (Individual Retirement​ Account) at the time you retire. You have the option of investing this money in two​ funds: Fund A pays 4.2​% annual

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Question 1151856: You have ​$500,000 in an IRA​ (Individual Retirement​ Account) at the time you retire. You have the option of investing this money in two​ funds: Fund A pays 4.2​% annually and Fund B pays 6.7​% annually. How should you divide your money between Fund A and Fund B to produce an annual interest income of ​$28,500​?
Answer by ikleyn(52778)   (Show Source): You can put this solution on YOUR website!
.

0.042x + 0.067(500000-x) = 28500.


x =  = 200000.


ANSWER.  $200000 at 4.2% and the rest $300000 at 6.7%.


CHECK.   0.042*200000 + 0.067*300000 = 2,500  dollars.   ! Precisely correct !

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It is a standard and typical problem on investments.

If you need more details,  or if you want to see other similar problems solved by different methods,  look into the lesson
    - Using systems of equations to solve problems on investment
in this site.

You will find there different approaches  (using one equation or a system of two equations in two unknowns),  as well as
different methods of solution to the equations  (Substitution,  Elimination).

Also,  you have this free of charge online textbook in ALGEBRA-I in this site
    - ALGEBRA-I - YOUR ONLINE TEXTBOOK.

The referred lesson is the part of this online textbook under the topic  "Systems of two linear equations in two unknowns".


Save the link to this online textbook together with its description

Free of charge online textbook in ALGEBRA-I
https://www.algebra.com/algebra/homework/quadratic/lessons/ALGEBRA-I-YOUR-ONLINE-TEXTBOOK.lesson

to your archive and use it when it is needed.



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