Question

A retired woman has $80,000 to invest but needs to make $9,000 a year from the interest to meet certain living expenses. One bond investment pays 15% annual interest. The rest of it

she wants to put in a CD that pays 7%.
Set up and solve the equation for how much the woman should invest in each option to sustain exactly a $9,000 annual return.
bond $ ?
CD $?

Answer 1

bond $42,500

CD $37,500

Explanation:

While x is investment in bond in k$

y is investment in CD in k$

`x+y=80\\.15x+.07y=9`

Solving gives

x=42,5

y=37,5