Problema Solution
You have $250,000 in an IRA. You have the option of investing this money in two funds: Fund A pays 2.5% annually and Fund B pays 7.5% annually. How should you divide your money between Fund A and Fund B to produce and annual interest income of $10,250.
Answer provided by our tutors
Fund A: x
Fund B: 250000-x
The equation is
2.5%*x + 7.5%*(250000-x) = 10250
So
x = 170,000
So
Fund A: $170,000
Fund B: $80,000