November 2023
Problem of the Month
Company Gift
Submitted by K. Sengupta
A company receives a gift of $ 155,000. The money is invested in stocks, bonds, and CDs.
CDs pay 4.5 % interest, bonds pay 2.8 % interest, and stocks pay 8.4 % interest.
The company invests $ 40,000 more in bonds than in CDs.
If the annual income from the investments is $ 7,930, how much was invested in each account?
Solution:
The company had $30,000 invested in CDs, $70,000 invested in bonds, and $55,000 invested in Stocks.
Let s = amount invested in stocks
Let b = amount invested in bonds
Let c = amount invested in CDs
Then you can write three equations:
(1) c + b + s = 155,000
(2) .045c + .028b + .084s = 7930
(3) b = c + 40,000
Substituting (3) in (1), we obtain:
(4) s = 115,000 - 2c
Now multiply both sides of equation (2) by 1,000:
(5) 45c + 28b + 84s = 7,930,000
Now substitute (4) and (3) in equation (5) to get:
45c + 28(c + 40,000) + 84(115,000 - 2c) = 7,930,000
45c + 28c + 1,120,000 +9,660,000 - 168c = 7,930,000
2,850,000 = 95c
Therefore, c = $30,000
b = $70,000
s = $55,000