Cindy has 70000 to invest and requires an overall rate of re

Cindy has $70,000 to invest and requires an overall rate of return of 9%. She invests her money in one account at 8% while another in an account paying 12%. How much should be placed in each investment to achieve her goal?

Solution

Solution:

Let x be the number of dollars she invests in the first account. She must invest 70000 x dollars in other account.

At the end of the year, she will make (0.08) · x dollars from the first account, she will make (0.12) · (70000 x)

dollars from the second account.

The dollar amounts from the two investments must sum to her goal of (0.09) · (70000) dollars.

This leads to the equation (0.08) · x + (0.12) · (70000 x) = (0.09) · (70000)

=> x = 52500. That is, Cindy should invest $52,500 in a first account and $17,500 in the second account.