Given:
Total winnings = $700000
Rate on utility bond = 80% per year
Rate on savings account = 20% per year
To find: Funds to be allocated to each investment so as to get same income from both investments.
Solution:
Let the amount invested in utility bonds be x.
Let the amount invested in savings account be y.
We get equations as below,
x + y = 700000
y = 700000 - x
0.80x = 0.20y
Putting value of y in the formula, we get
0.80x = 0.20 (700000-x)
0.80x = 140000 - 0.20x
x = 140000
x = $140000
y = $700000 - x
y = $700000 - $140000
y = $560000
So, in order to get same income from both the investments $140000 should be invested in utility bonds and $560000 should be invested in savings account.
