Assume that her total winnings are $ 700000, that the utility bonds will pay 80 percent per year, and that the savings account will pay 20 percent per year. how much should she allocate to each investment in order for the yearly incomes from them to be the same?

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28 April, 11:28

Assume that her total winnings are $ 700000, that the utility bonds will pay 80 percent per year, and that the savings account will pay 20 percent per year. how much should she allocate to each investment in order for the yearly incomes from them to be the same?

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Lara Jennings · Answer 1

Given:

Total winnings = $700000

Rate on utility bond = 80% per year

Rate on savings account = 20% per year

To find: Funds to be allocated to each investment so as to get same income from both investments.

Solution:

Let the amount invested in utility bonds be x.

Let the amount invested in savings account be y.

We get equations as below,

x + y = 700000

y = 700000 - x

0.80x = 0.20y

Putting value of y in the formula, we get

0.80x = 0.20 (700000-x)

0.80x = 140000 - 0.20x

x = 140000

x = $140000

y = $700000 - x

y = $700000 - $140000

y = $560000

So, in order to get same income from both the investments $140000 should be invested in utility bonds and $560000 should be invested in savings account.