If we let x be the amount the woman invests in the 15% bond, how much in dollars will she be able to invest in the CD?

Question

A retired woman has $90,000 to invest but needs to make $6,000 a year from the interest to meet certain living expenses. One bond investment pays 15% annual interest. The rest of it she wants to put in a CD that pays 7%.

 

If we let x be the amount the woman invests in the 15% bond, how much in dollars will she be able to invest in the CD?

Answer 1

The question is a bit strange. If she invested all of the money in the 7% CD she would earn 6300 per year. If, However, we assume that she can't draw down the CD for say, 5 years then we have to say the she needs 6,00 in Bond income per year. so X*((15%*90,000) must = 6,000 or X= 6000/(15%*90,000) x =44.44 % or she would put 40,000 in bonds and 50,00 in the CD