SOLUTION: A man has $95,000 invested in stocks at 9%. How much additional money should he invest in CD's paying 3% so that the average return on the two investments is 4%?
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Question 288440: A man has $95,000 invested in stocks at 9%. How much additional money should he invest in CD's paying 3% so that the average return on the two investments is 4%? Answer by mananth(16946) (Show Source):
The total investment is x+95000. 4% of this amount must be equal to the interest he will get without investment in cd's
4% of ( x+95000)= 0.04 * (x+95000)
0.03x+0.09*95000 = 0.04 * ( x+95000)
0.03x + 8550 = 0.04x +3800
0.01x= 8550-3800
0.01x= 4750
x= 4750 / 0.01
x= 475000 He has to invest $475,000 on 3% cd's.
