Question

Stock in Ombor Medical Supplies earns a return of 5.3% annually, while bonds issued by Ombor Medical Supplies earns a return of 4.1% annually. If you invest a total of $2,400 in Ombor Medical Supplies, $1,400 of which is in bonds and $1,000 of which is in stocks, which side of the investment will show a greater return after six years, and how much greater will it be?

a. The stocks will earn $55.60 more than the bonds.
b. The stocks will earn $118.60 more than the bonds.
c. The bonds will earn $82.00 more than the stocks.
d. The bonds will earn $26.40 more than the stocks.

Answer 1

it is d

Explanation:

i took the edu test :)

Answer 2

d. The bonds will earn $26.40 more than the stocks.

Explanation:

Assuming, the rates are uniform for 6 years.

Stock in Ombor Medical Supplies earns a return of 5.3% annually, so $1000 will yield annually;

`0.053*1000=53` dollars

Total amount in 6 years will become =
`53*6=318` dollars

Bonds issued by Ombor Medical Supplies earns a return of 4.1% annually, so $1400 will yield annually;

`0.041*1400=57.40` dollars

Total amount in 6 years will become =
`57.40*6=344.40` dollars

We can see that bonds have high yield than stocks.

So, difference amount is =
`344.40-318=26.40` dollars.

Therefore, The bonds will earn $26.40 more than the stocks.