Question

Mike has $235,000 he wishes to invest in two rental properties. One yields 10% and the other yields 12%. For safety he wants to split his investment between the two properties instead of investing all of his money in the higher yielding rental property. If his goal is to achieve a total income earned of $25,00 a year from these two properties, how much money should he invest in each property. You must show your work illustrating how you calculated your answer in order to get credit for this problem?

Amount invested in property yielding 10% ________________

. Amount invested in property yielding 12% ________________.

Answer 1

let amount invested in 10% = x

amount invested in 12% = y

x + y = 235000

.10x + .12y = 25000

solving the equations

amount invested in 10% = $160000

amount invested in 12% = $ 75000