Betsy, a recent retiree, requires $5 comma 000 per year in extra income. She has $60 comma 000 to invest and can invest in B-rated bonds paying 17 % per year or in a certificate of deposit (CD) paying 7 % per year. How much money should be invested in each to realize exactly $5 comma 000 in interest per year?

Betsy needs to invest $8,000 in bonds and $52,000 in a CD

Explanation:

B = amount invested in bonds

C = amount invested in a CD

step 1:

B + C = 60,000

0.17B + 0.07C = 5,000

step 2:

C = 60,000 - B

step 3:

0.17B + 0.07 (60,000 - B) = 5,000

step 4:

0.17B + 4,200 - 0.07B = 5,000

step 5:

0.1B = 800

step 6:

B = 800 / 0.1 = 8,000

C = 60,000 - B = 60,000 - 8,000 = 52,000