A woman plans to invest x dollars. Her investment counselor advises her that a safe plan is to invest 30% of that money in bonds and 70% in low risk stocks. The bonds currently have a simple interest rate of 7% and the stock has a dividend rate (like simple interest) of 9%. Homework Help ✎
Write an expression for the annual income that will come from the bond investment.
Write an expression for the annual income that will come from the stock investment.
Write an equation and solve it to find out how much the client needs to invest to have an annual income of $5,000.
Since she will invest 30% of x dollars in bonds 0.3x represents the money she has in bonds.
Since she makes 7% interest on the bonds, multiply that amount by 0.07.
B = 0.07(0.3x) or B = 0.021x
Refer to part (a).
B + S = 0.084x
0.084x = 5000