Problema Solution
A commercial bank officer contemplates investing 600,000 in two different types of short term loans- loans without security at 6% interest and secured loans at 4.5%. He wishes to realize an annual return of 5% from his loans and keep the amount invested in unsecured loans to a minimum in order to reduce his risk. If the sum is invested in lots of 1,000 each, how many lots and how much shouldthe bank officer invest in each type of loan?
Answer provided by our tutors
let
x = the number of lots invested in 6% loans
y = the number of lots invested in 4.5% loans
x + y = 600 (since 600,000 = 600*1,000)
0.06x + 0.045y = 0.05*600
by solving the system of equations
x + y = 600
0.06x + 0.045y = 0.05*600
we find
x = 200 lots
y = 400 lots
click here to see the step by step solution of the system of equations
he should invest 200 lots on the 6% loans and 400 lots on the 4.5% loan.