Question

Adnan has $40,000 to invest and hopes to earn 7.1% interest per year. He will put some of the money into a stock fund that earns 8% per year and the rest into bonds that earns 3% per year. How much money should he put into each fund?

A) Invest $20,000 in the stock fund and $20,000 in bonds.

B) Invest $25,000 in the stock fund and $15,000 in bonds.

C) Invest $15,000 in the stock fund and $25,000 in bonds.

D) Invest $30,000 in the stock fund and $10,000 in bonds.

E) Invest $10,000 in the stock fund and $30,000 in bonds.

Answer 1

Adnan should invest $25,000 in the stock fund and $15,000 in bonds.

Step-by-step explanation:

To determine how much money Adnan should put into each fund, we can set up the following equation:

0.08x + 0.03(40000 - x) = 0.071(40000)

Where x represents the amount of money Adnan put into the stock fund. Solving this equation, we find that x = 25000. Therefore, Adnan should invest $25,000 in the stock fund and $15,000 in bonds.