I need help with the equation and solving this type of word problem.

Question

Devante just retired, and has $730,000 to invest. A very safe Certificate of Deposit (CD) account pays 1%, while a riskier bond fund pays 8.5% in interest. Devante figures he needs $51,000 a year in interest to live on. How much should he invest in each account to make enough interest while minimizing his risk?

We did not go over this type of problem in class so I would like help with forming the equation, and figuring out the answer for future reference with these types of problems.

Answer 1

call x the amount he will invest at 1%

the amount to invest at 8.5% is 730,000 -x

so interest is .01x. + .085(730000-x) which needs to equal 51000

.01x + 62050 -.085x=51000

-.075x=-11050

x=147,333.33 amount to invest at 1%

730,000 - 147,333.33= 582,666.67 amount to invest at 8.5%