A $128,000 trust is to be invested in bonds paying 9%, CDs paying 6%, and mortgages paying 10%. The sum of the bond and CD investment must equal the mortgage investment. To earn an $10,900 annual income from the
Investments, how much should the bank invest in bonds?
A) $42,000
B) $64,000
C) $20,000
D) $22,000

Question

Quizplus · Accepted Answer

The total investment is $128,000, and the annual income goal is $10,900. Let's denote the amount invested in bonds, CDs, and mortgages as B, C, and M, respectively. We have two conditions: B + C = M, and the total investment is B + C + M = $128,000. The income from these investments is 0.09B + 0.06C + 0.10M = $10,900. Using the condition B + C = M, we can substitute M in the total investment equation and the income equation. Solving these equations, we find that the amount invested in bonds (B) is $22,000.

A $128,000 Trust Is to Be Invested in Bonds Paying