Question 1161987: A retired woman has $90,000 to invest but needs to make $3,000 a year from the interest to meet certain living expenses. One bond investment pays 15% annual interest. The rest of it she wants to put in a CD that pays 7%. If we let x be the amount the woman invests in the 15% bond, how much in dollars will she be able to invest in the CD?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! to make 3000 from the 15% bond, she would have to invest 3000 / .15 = 20,000.
the rest is 70,000 that she can invest in the 7% cd.
20,000 * .15 = 3000
70,000 * .07 = 4900.
the amount invested in the 15% bond earns her enough to cover her expenses.
the rest earns her an additional 4900 a year.
i doesn't make sense that she would only want to earn 3000 from both investments.
it does make sense that she would want to earn at least 3000, and possibly more, if the investments allow that.
in that case, she would want to maximize her interest.
that would mean a larger investment in the 15% bonds and a smaller investment in the CDs.
to maximize her interest, she would invest all of her monty in the fonds.
that would give her an annual interest of .15 * 90,000 = 13,500.
in that case, there would be no investment in the CDs.
if the purpose is to maximize the inbvestment in the CDs, more than likely because they are a safer investment, then the agove calculations would apply where all that needs to be earned from the bonds is the 3000 required for expenses, with the remainder being invested in the CDs.
that's the solution i provide you with above, that solution being:
20,000 invested in bonds and 70,000 beins invested in CDs.
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