Word Problem

Question

a retiree desires 36,000 per year in retirement income. she has 840,000 to invest in two investment vehicles, a riskier one that yields an expected 5% per year and another safer that one yields 2% per year. how much should she invest in each investment in order to reach her yearly retirement income goal?

Answer 1

Since no indication is give as to how often interest is compounded, assume simple interest paid annually. Let X represent the amount invested in the 5% account.

36000 = (X * 0.05) + ((840,000 - X) * 0.02)

Solve for X.