Question

A total of $44,000 is invested in two municipal bonds that pay 5.75% and 7.25% simple interest. The investor wants an annual interest income of $2740 from the investments. What amount should be invested in the 5.75% bond?

Answer 1

As given in the question,

total amount invested by investor in municipal bonds = $44,000

let x dollars invested by investor in 5.75% bonds.

this implies,

income from $x interest + income from ($44,000 - $x) interest = $2740

(5.75*x)/100 + 7.25*(44000 - x)/100 = 2740

5.75*x + 7.25*44000 - 7.25*x = 2740*100

-1.5*x = 274000 - 7.25*44000

-1.5*x = 274000 - 319000

-1.5*x = - 45000

1.5*x = 45000

x = 45000/1.5

x = 30000

So, investor invest $30,000 for 5.75% simple interest in municipal bond.

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