Problema Solution

Betsy requires %6,000 per year in extra income. She has $70,000 to invest and can invest in bonds paying 15% per year or in a certificate of deposit paying 5% per year. How much money should be invested in each to realize exactly $6,000 in interest per year?

Answer provided by our tutors

Let



x = the money that Betsy invests in bonds paying 15% per year that is 0.15*x per year


y = the money that Betsy invests in a certificate of deposit paying 5% per year that is 0.05*y per year


The total money invested is x + y = 70000


The total interest per year is = interest from bonds per year + interest from certificate of deposit per year


6000 = 1.15*x + 0.05*y


By solving the system of equations


x + y = 70000

6000 = 1.15*x + 0.05*y


we find


x = $22,727.3

y = $67,727.3


Betsy needs to invest $22,727.3 in bonds and $67,727.3 in a certificate deposit.