. An individual wishes to invest $5000 over the next year in two types of investment: Investment A yields 5%, and investment B yields 8%. Market research recommends an allocation of at least 25% in A and at most 50% in B. Moreover, investment in A should be at least half the investment in B. How should the fund be allocated to the two investments?

Respuesta :

Answer:

The amount invested at Investment A must be greater than or equal to $2,750

The amount invested at Investment B must be less than or equal to $2,250

Step-by-step explanation:

Let

x -----> the amount invested at Investment A yields 5%

y -----> the amount invested at Investment B yields 8%

we know that

[tex]x+y=5,000[/tex]

[tex]x=5,000-y[/tex]  -----> equation A

[tex]x \geq 0.25(5,000)[/tex]

[tex]x \geq \$1,250[/tex] -----> inequality B

[tex]y \leq 0.50(5,000)[/tex]

[tex]y \leq \$2,250[/tex] -----> inequality C

[tex]x \geq \frac{1}{2}y[/tex] -----> inequality D

Substitute equation A in the inequality D and solve for y

[tex]5,000-y \geq \frac{1}{2}y[/tex]

Multiply by 2 both sides

[tex]10,000-2y \geq y[/tex]

Multiply by -1 both sides

[tex]-10,000+2y \leq -y[/tex]

Adds y both sides

[tex]-10,000+2y+y \leq 0[/tex]

[tex]-10,000+3y \leq 0[/tex]

adds 10,000 both sides

[tex]3y \leq 10,000[/tex]

Divide by 3 both sides

[tex]y \leq \$3,333.33[/tex] -----> inequality E

therefore

Solve for y

we have

[tex]y \leq \$2,250[/tex] -----> inequality C

[tex]y \leq \$3,333.33[/tex] -----> inequality E

The solution of inequality C and inequality E is

[tex]y \leq \$2,250[/tex]

For y=2,250

x=5,000-y ----> x=5,000-2,250=2,750

so

[tex]x \geq \$2,750[/tex] -----> inequality F

Solve for x

we have

[tex]x \geq \$1,250[/tex] -----> inequality B

[tex]x \geq \$2,750[/tex] -----> inequality F

The solution of inequality B and inequality F is

[tex]x \geq \$2,750[/tex]

therefore

The amount invested at Investment A must be greater than or equal to $2,750

The amount invested at Investment B must be less than or equal to $2,250