A total of $32,000 is invested in 2 bonds that pay 5.75% and 6.25% simple interest. The investor wants an annual interest income of $1900 from the investments. What amount should be invested in the 5.75% bond.
2007-06-14 13:59:13 · 4 answers · asked by Lollipop 3 in Business & Finance ➔ Investing
This must be a homework question… So ok, here is how you figure this one out. Let’s say X is the quantity of the higher yielding bonds you need, and Y is the quantity of the lowering yielding bonds you need. Since you have $32,000 to invest, we know that X + Y must equal $32,000. At the same time, if you need $1,900 per year, 0.625X + 0.0575Y must also equal $1,900. So it’s just a matter of solving for Y. In this case, you need exactly $20,000 of the 5.75% bond, and $12,000 of the 6.25% bond. Now go tell your professor to give you something more challenging next time.
2007-06-14 14:21:38 · answer #1 · answered by Eagle 1 · 0⤊ 0⤋
think how much do I have to invest in each bond considering I have only $32,000 and require an interest of $1900 investing in 2 bonds. The equation would be:
X * 0.0575 + (32000-x) * 0.0625 = 1900
Solve for X and you have the answer.
Good luck
2007-06-14 15:17:24 · answer #2 · answered by elmo s 1 · 0⤊ 0⤋
Return : $1,900.00
investment $20,000.00
interest rate 5.75%
returns returns $1,150.00
investment $12,000.00
interest rate 6.25%
returns $750.00
Spreadsheets are great :-)
as long as you copy and paste the correct answer :-O
2007-06-14 18:03:33 · answer #3 · answered by pol_pak 3 · 0⤊ 0⤋
this is your standard 2 variable word problem. I'm SURE your math book has an example which is almost exactly the same with different numbers.
2007-06-14 14:15:51 · answer #4 · answered by missingsurfingincali 2 · 0⤊ 0⤋
??????????Srry i didnt get it either..hehe
2007-06-14 14:06:47 · answer #5 · answered by ariel 2 · 0⤊ 0⤋