1. You have $55000 to invest, and two funds you would like to invest in. The You-Risk-It Fund yields 13% interest. The Extra-Dull Fund yields 7% interest. Because of the college financial aid implications, you don’t think you can afford to earn more than $6500 in interest income this year. How should you put in each fund?

Question

1. You have $55000 to invest, and two funds you would like to invest in. The You-Risk-It Fund yields 13% interest. The Extra-Dull Fund yields 7% interest. Because of the college financial aid implications, you don’t think you can afford to earn more than $6500 in interest income this year. How should you put in each fund?

Answer 1

Invest $X @ 13% in You-Risk-it fund.

Invest$(55,000-X) @ 7% in Extra-Dull Fund.

0.13x + 0.07(55,000-x) = $6500,
0.13x + 3850 - 0.07x = 6500,
0.06x = 2650,

X = $44,166.67. Invested @ 13%.
(55,000 - 44,166.67) = $10,833.33 Invested @ 7%.