Aparty has a $500,000 IRA. How should he divides the money into fund A for 5.2% annually, and Fund B for 7.7% annually, to produce an annual income of $30,000?

Answer 1

A + B = 500,000

0.052A + 0.077 B = 30,000

Solve simultaneously for A and B

0.052 A + 0.052B = 0.052 x 500,000
= 26,000
0.025 B = 4000
B = 160,000
A = 340,000