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Thread: Financial Planning Part 2

  1. #1
    Member harpazo's Avatar
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    Financial Planning Part 2

    After two years, Betsy finds that she will require 7000 dollars per year in extra income in terms of retirement. She has 50,000 dollars to invest and can invest in B-rated bonds paying 15 percent per year or in a certificate of deposit paying 7 percent per year. How much money should be invested in each to realize exactly 6000 dollars in interest per year?

    This question, we can say, is part 2 of a question posted several days ago by the title Financial Planning. I figured that we simply change 6000 to 7000 in the equation set up.

    (50,000 - x)(0.15) + x(0.07) = 7000

    Correct?
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  2. #2
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    Re: Financial Planning Part 2

    Don't you think that 6000 dollars is a typo: should be 7000 ?
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    Re: Financial Planning Part 2

    Quote Originally Posted by DenisB View Post
    Don't you think that 6000 dollars is a typo: should be 7000 ?
    I see the typo. Is the correct equation
    (50,000 - x)(0.15) + x(0.07) = 7000 for this application?
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    Re: Financial Planning Part 2

    Yes. You should end up with 43750@15% and 6250@7%
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    Re: Financial Planning Part 2

    (50,000 - x)(0.15) + x(0.07) = 7000

    7500 - 0.15x + x(0.07) = 7000

    -0.15x + x(0.07) = 7000 - 7500

    -0.08x = -500

    x = -500/-0.08

    x = 6250

    50,000 - 6250 = 43,750

    Yes, 6250 at 7 percent and 43,750 at 15 percent.
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    Re: Financial Planning Part 2

    [QUOTE=harpazo;941598

    Yes, 6250 at 7 percent and 43,750 at 15 percent.[/QUOTE]

    harpazo, you did not write the answers with the correct units, that being of U.S. currency. You need to post them as one of these equivalents:


    6,250 dollars at 7 percent

    43,750 dollars at 15 percent


    - - - - - - - - - - - or - - - - - - - - - - - - -


    $6,250 at 7%

    $43,750 at 15%
    Last edited by greg1313; Nov 7th 2018 at 01:43 PM.
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    Re: Financial Planning Part 2

    Quote Originally Posted by greg1313 View Post
    harpazo, you did not write the answers with the correct units, that being of U.S. currency. You need to post them as one of these equivalents:


    6,250 dollars at 7 percent

    43,750 dollars at 15 percent


    - - - - - - - - - - - or - - - - - - - - - - - - -


    $6,250 at 7%

    $43,750 at 15%
    Yes, I forgot the units.
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