SOLUTION: A person plans to invest a total of ​$250,000 in a money market​ account, a bond​ fund, an international stock​ fund, and a domestic stock fund. She wants 60​% of her

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Question 1161622: A person plans to invest a total of ​$250,000 in a money market​ account, a bond​ fund, an international stock​ fund, and a domestic stock fund. She wants 60​% of her investment to be conservative​ (money market and​ bonds). She wants the amount in domestic stocks to be 4 times the amount in international stocks.​ Finally, she needs an annual return of ​$10,000
Assuming she gets annual returns of​ 2.5% on the money market​ account, 3.5% on the bond​ fund, 4% on the international stock​ fund, and​ 6% on the domestic stock​ fund, how much should she put in each​ investment?
Answer by ikleyn(52814)   (Show Source): You can put this solution on YOUR website!
.

60% of $250000, i.e.  $150000,  go to the money market and bonds.


Hence, 40%,  or $100000,  go to the international and domestic funds.


These $100000 splits this way:  $820000 go to the international and $80000 to the domestic.


Then these $100000 produce the annual interest of  0.04*20000 + 0.06*80000 = 5600 dollars.



    Thus you reduce the problem to TWO funds ONLY: a money market account and the bond fund 
    with the total  amount of $250000 - $100000 = $150000 and the annual interest of $1000 - $5600 = $4400.



It can be solved using one unknown x = bonds.  You have then this equation


    0.025*(150000-x) + 0.035*x = 4400


The solution to it is


    x =  = 65000  dollars.


ANSWER.  Bonds:  $65000;   money market:  150-65000 = 85000 dollars;

         international:  $20000;  domestic:  $80000.

Solved, answered, explained and completed.



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