The Fiedler family has up to $130,000 to invest. They decide that they want to have at least $40,000 invested in stable bonds yielding 5.5% and that no more than $60,000 should be invested in more volatile bonds yielding 11%. How much should they invest in each type of bond to maximize income if the amount in the stable bond should not exceed the amount in the more volatile bond? What is the maximum income?

Answer 1

first, put the words into algebra. If there is x at 5.5% and y at 11%, you have:

x+y <= 130000
x >= 40000
y <= 60000

maximize p = .055x + .11y

Now just use your favorite linear programming tool.