(I have already posted this, but was not sure how the person explained it. If po
ID: 3037035 • Letter: #
Question
(I have already posted this, but was not sure how the person explained it. If possible, please write it out and show how to go about it)
Investment. A trust account manager has $240,000 to be invested. The investment choices have current yields of 8%, 7% and 10%. Suppose that the investment goal is to earn interest of $18,000, and risk factors make it prudent to invest some money in all three investments. a. Find a general description for the amounts invested at three rates. b. If $10,000 is invested at 10%, how much will be invested at each of the other rates? c. What is the maximum amount that will be invested at 7%, and in this case how much will be invested at the other rates? d. What is the minimum amount that will be invested at 7%, and in this case how much will be invested at the other rates?
Explanation / Answer
I am again the same person as my answer were:
1) $10,000 at 10% and by Taking X at 8 % and $230,000 - X at 7 %
By equating with total interest as $18,000 we get
$90,000 at 8% and $140,000 at 7%
2) Maximum invested in 7 %
In this case total interest should be reached $18K so to maximize amount in 7% and to fulfill our needs we have to invest remaining amount at 10%
i.e. X in 7% and $240,000 - X in 10%
Again by equating with $18k we got X =$200,000 max. possible in 7 % and $40,000 in 10%
3) Similarly for minimum case:
to fulfill our needs and to minimize amount in 7% = max money should be used to reach goal and if we use 10% investment option we will reach our goal with less money...So we have to avoid 10% investment option to minimize money in 7%
$120,000 in both 7% and 8%
For general case let's assume A amount at 7% and B at 8% and remaining $240,000 - A - B at 10%
18000 = 7A/100 + 8B/100 + (240000 - A -B)/10
Hoping everything is clear this time
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