Investing question

Question

Don James wants to invest $55,000 to earn $5250 per year. He can invest in B-rated bonds paying 12% per year or in a Certificate of Deposit (CD) paying 7% per year. How much money should be invested in each to realize exactly $5250 in interest per year?

 

 

Please help me solve the question 

Answer 1

b = amount invested in bonds

55000 - b = amount invested in CD's

 

0.12b + 0.7(55000 - b) = 5250         Multiply all by 100 to clear decimals

12b + 7(55000 - b) = 525000

12b + 385000 - 7b = 525000

5b = 14000

b = 28000

 

Don James should invest $28,000 in bonds and $27,000 in CDs.