You have $250,000 in an IRA (Individual Retirement Account) at the time you retire. You have the option of investing this money in two funds: Fund A pays 5.4% annually and Fund B pays 7.9% annually. How should you divide your money between fund Fund A and Fund B to produce an annual interest income of $14,750?
You should invest $______in Fund A and $___________in Fund B.
Equation is x(.079) + (250,000 - x).054 = 14,750
.025x + 13,500 = 14,750
.025x = 1,250
x = 50,000 for Fund A
So at 5.4%, we have 250,000 - 50,000 = 200,000 for the other fund B.
You should invest $______in Fund A and $___________in Fund B.
Equation is x(.079) + (250,000 - x).054 = 14,750
.025x + 13,500 = 14,750
.025x = 1,250
x = 50,000 for Fund A
So at 5.4%, we have 250,000 - 50,000 = 200,000 for the other fund B.