Betsy, a recent retiree, requires 6,000 per year in extra income. She has 70,000 to invest and can invest in B-rated bonds paying 15% per year or in a certificate deposit (CD) paying 7% per year. How much money should be invested in each to realize exactly 6,000 in interest per year?

Thank you for the opportunity to help you with your question!

Let X amount invested in B-rated bonds and (70,000-x) in certificate deposit.

.15*X+(70,000-X)*.07=6000

X*(.08)+4900=6000;

X=13,750

Thus ,Betsy should invest 5000 in in B-rated bonds paying 15% per year and 56250 in a certificate deposit (CD) paying 7% per year to realize exactly 6,000 in interest per year.

Please let me know if you need any clarification. I'm always happy to answer your questions.

Oct 28th, 2015

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