Solve the problem

Question

A 84,000 trust is to be invested in bond paying 8%, CDs passing 7% and mortgages paying 9%. The soon is the bond and CD investment must equal the mortgage investment. To earn an $7010 annual income from the investments, how much should the bank invest in bonds?

Answer 1

If I'm understanding the question correctly, we have three variables so we need three equations.

 

B = bond investment

C = CD investment

M = mortgage investment

 

1) B +C + M = 84000

2) B + C = M

 

3) .08B + .07C + .09M = 7010

 

Substituting equation 2 into equation 1 gives us:

 

M + M = 84000   So M = 42000

 

We then put in 42000 for M and do a linear combination with equations 1 and 3:

 

-.07(B + C + 42000 = 84000)

.08B + .07C + .09(42000) = 7010

 

giving us:

 

.01B + 840 = 1130

 

.01B = 290

 

B = 29000