Problema Solution
You have $500,000 in an IRA (Individual Retirement Account) at the time you retire. You have the option of investing this money in two funds: Fund A pays 1.8% annually and Fund B pays 6.8% annually. How should you divide your money between Fund A and Fund B to produce an annual interest income of $24,500?
Answer provided by our tutors
let
x = the money invested in Fund A
y = the money invested in Fund B
x + y = 500,000
0.018x + 0.068y = 24,500
by solving we find:
x = $190,000
y = $310,000
click here to see the step by step solution of the system of equations:
you should invest $190,000 in Fund A and $310,000 in Fund B.