12. -8.37 points TanFin 12 2.3.041 My Notes Mr. and Mrs. Garcia have a total of
ID: 3145517 • Letter: 1
Question
12. -8.37 points TanFin 12 2.3.041 My Notes Mr. and Mrs. Garcia have a total of $100,000 to be invested in stocks, bonds, and a money market account. The stocks have a rate of return of 6%/year, while the bonds and the money market account pay 4%/year and 2%/year, respectively. The Garcias have stipulated that the amount invested in stocks should be equal to the sum of the amount invested in bonds and 3 times the amount invested in the money market account. How should the Garcias allocate their resources if they require an annual income of $5,000 from their investments? Give two specific options. (Let x1, yi, and z1 refer to one option for investing money in stocks, bonds, and the money market account respectively. Let x2, Y2, and z2 refer to a second option for investing money in stocks, bonds, and the money market account respectively.) f(X1, V1, z1), (x2, V2, z2))- Need Help? L Read.Explanation / Answer
Dear Student Thank you for using Chegg !! Given Total Amount to be invested be = 100000 $ Return on stocks = 6% per year Return on bonds = 4% per year Return on money market = 2% per year Amount in stocks = x1 x2 Amount in bonds = y1 y2 Amount in money market = z1 z2 Also given x1 = y1 + 3z1 x1 + y1 + z1 = 100000 y1 + 3z1 + y1 + z1 = 100000 2y1 + 4z1 = 100000 (1) 0.06x1 + 0.04y1 + 0.02z1 = 5000 0.06 (y1 + 3z1) + 0.04y1 + 0.02z1 = 5000 0.1y1 + 0.2z1 = 5000 y1 + 2z1 = 50000 (2) Clearly we can have infinite solutions for y1 and z1 (profits) If y1 = 20000 800 z1 = 15000 300 => x1 = 65000 5200 Sum> 5000 Another case (profits) y2 = 30000 1200 z2 = 10000 200 z2 = 60000 4800 Sum> 5000 Solutions
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.