Safe Investments
Assume you have $3600 to invest for 1 year. You can make a safe investment that yields 4% interest a year or a?
Assume you have $3600 to invest for 1 year. You can make a safe investment that yields 4% interest a year or a risky investment that yields 8% a year. If you want to combine safe and risky Investments to make $180 a year, how much of the $3600 should you invest at the 4% interest? How much at the 8% interest?
let x be the amount invested at 4%
let y be the amount invested at 8%
x + y = 3600
0.04x + 0.08y = 180
0.04(3600 – y) + 0.08y = 180
144 – 0.04y + 0.08y = 180
0.04y = 36
y = 900
x + 900 = 3600
x = 2700
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The Market Does NOT Outperform Safe Investments