Problema Solution
Ed Moura has 67000 invested in stocks paying 7 percent. How much additional money should he invest in certificates of deposit paying 2 percent so that the average return on the two investments is 3 percent?
Answer provided by our tutors
let
P = $67,000 invested paying rate r1 = 7%
x additional money invested paying r2 = 2%
the average return of the 2 investments together (P +x) should be r = 3%
since
interest = invested money * rate
we have
P*r1 + x*r2 = (P + x)* r
0.07*67000 + 0.02*x = 0.03(x + 67000)
by solving this equation we find
x = $268,000
Ed Moura should invest $268,000 additional money in certificates.