Solve the word problem

Question

Sachi has $28,000 to invest. Her financial planner suggests that she diversify her investment into three investment categories. Treasury bills that yield 3% simple interest annually, municipal bonds that yield 5% simple interest annually, and corporate bonds that yield 9% simple interest annually. Sachi would like to earn $1380 per year in income. In addition, Sachi wants her investment in Treasury bills to be $7000 more than her investment in corporate bonds. How much should Sachi invest in each investment category?

Answer 1

Assume she invest $x in corporate bonds

 

she invests in:

corporate bond: $x

T-bills: $(x+7000)

muni bonds: $(28000-x-(x+7000))

 

After 1 year, the income is:

corporate bond: 9%*x
T-bills: 3%*(x+7000)
muni bonds: 5%*(28000-x-(x+7000))

 

Total income=9%*x+3%*(x+7000)+5%*(28000-x-(x+7000)) =1380

 

x=6000

 

corporate bond: $6000
T-bills: $13000
muni bonds: $9000