Question

Betsy, a recent retiree requires 6,000 per year in extra income. She has $70,000 to invest and can invest in B-rated bonds paying 13% per year or in a certficcate of deposit (CD) paying 3% per year.How much money should be invested in each to realize exactly $6,000 in interest per year?

The amount of money invested at 13% ____________?
The amount of money invested at 3%? ____________?

Answer 1

$46,154

$200,000

Explanation:

Interest = Principal x Interest Rate x Time

Principal = Interest / (Interest Rate x Time)

Principal = $6,000 / (0.13 x 1)

Principal = $46,153.85

Principal = $46,154

Principal = Interest / (Interest Rate x Time)

Principal = $6,000 / (0.03 x 1)

Principal = $200,000