Question

Betsy recent requires 5,000 per year in extra income. She has $60,000 to invest and can invest B-bonds paying 15% per year or in a certificate of doposit (CD) paying 5% per year money should be to realize $5,000 in interest per year?

Answer 1

Betsy should allocate $20,000 into B-bonds at 15% interest and $40,000 into a CD at 5% interest to achieve her goal of an extra $5,000 in annual income.

Step-by-step explanation:

Betsy needs to generate $5,000 in extra income per year from her investment of $60,000. The options for investment include B-bonds with a 15% annual interest rate and a CD (certificate of deposit) offering a 5% annual interest rate. To determine how much money should be invested in each to realize the desired interest income of $5,000 annually, we can set up a system of linear equations.

Let's assume Betsy invests x dollars in B-bonds and y dollars in CDs. The total amount invested is $60,000, which can be represented as x + y = 60,000. The total annual income from these investments is $5,000, which gives us another equation based on the interest rates: 0.15x + 0.05y = 5,000.

Solving these two equations simultaneously will yield the amount to invest in each option. For example, multiplying the second equation by 20 gives us 3x + y = 100,000. Subtracting the first equation from this new equation gives us 2x = 40,000, or x = $20,000. This means Betsy should invest $20,000 in B-bonds. Substituting x in the first equation, we get 20,000 + y = 60,000, thus y = $40,000, which is the amount to invest in CDs.

In summary, Betsy should invest $20,000 in B-bonds and $40,000 in CDs to generate an annual income of $5,000.

Answer 2

I think it would be

at 15% a year she would make 9000 and at 5% she would only make 3000