Sue, a recent retiree, requires $6,000 per year in extra income. She has $50,000 to invest and can invest in B-rated bonds paying 15% per year or in a certificate of deposit (CD) paying 7% per year. How much money should be invested in each to realize exactly $6,000 in interest per year?

2 answers

Never mind the algebra. Where can I get that 7% CD?

Seriously, solve this equation:

0.15x + 0.07(50,000-x) = 6000

x is the amount invested in 15% bonds.
50,000 -x is invested in the CD.

The equation can easily be solved in two steps.
Sue, a recent retiree, requires $6,000 per year in extra income. She has $50,000 to invest and can invest in B-rated bonds paying 15% per year or in a certificate of deposit (CD) paying 7% per year. How much money should be invested in each to realize exactly $6,000 in interest per year?