Question

if Ben invest $5000 at 6% interest each year how much additional money must he invest at 7.5% annual interest to ensure that the interest he receives each year is 6.5% of the total amount invested

Answer 1

$2500

Explanation:

Let x represent the amount invested at 7.5%. Then the total annual interest received is ...

0.075x + 0.06·5000 = 0.065(x+5000)

0.01x = 25 . . . . . . simplify, subtract (.065x+.06·5000)

x = 25/0.01 = 2500

Ben must invest $2500 at 7.5% to ensure an average return of 6.5%.