Can someone please help me ??

Question

You have $250000 in an RRSP (Registered Retirement Savings Plan) at the time you retire. You have the option of investing this money in two funds: Fund A pays 5.15.1% annually and Fund B pays 7.67.6% annually. How should you divide your money money between Fund A and Fund B to produce an annual interest income of $14000?

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Answer 1 · 2018-01-28T02:06:15

Deposit $200 000 at 5.1% and 50 000 at 7.6%

We will split the $250 000 into two parts: $x$ and $250 000-x$

$x$ will be deposited at 5.1%, and the rest at 7.6%

This way, our total interest will be

$(x) xx0.051+(250 000 - x)xx0.076 = 14000$

Now, solve for $x$ :

$0.051x + 250 000(0.076) - 0.076x = 14 000$

$0.051x + 19000 - 0.076x = 14 000$

Collect like terms

$-0.025x + 5000=0$

$0.025x = 5000$

$x$ = 5000/0.025= 200 000

Deposit $200 000 at 5.1% and 50 000 at 7.6%