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# A person invested $20000 for one year, part at 8.5 percent  Question banks Downloads My Bookmarks Reviews Important topics Author Message TAGS: Intern Joined: 22 Sep 2004 Posts: 30 Followers: 0 Kudos [?]: 3 [0], given: 0 A person invested$20000 for one year, part at 8.5 percent [#permalink]  25 Feb 2005, 13:09
A person invested $20000 for one year, part at 8.5 percent simple annual interest and part at 12.5 percent simple annual interest. For a$2500 interest, at least how much of the money is to be deposited at 12.5 percent?
Manager
Joined: 24 Jan 2005
Posts: 217
Location: Boston
Followers: 1

Kudos [?]: 5 [0], given: 0

Well the answer is deposit the entire amount at 12.5% .

since 12.5% of 20,000 = 2500

Equation is

2500 = (8.5/100)*x + (12.5/100)*(20,000-x)

2500 = 2500 - 4x/100

=> x =0
Intern
Joined: 22 Sep 2004
Posts: 30
Followers: 0

Kudos [?]: 3 [0], given: 0

You are missing something

The question asking for AT LEAST how much of the money is to be deposited at 12.5 percen

The minimum money needed
Manager
Joined: 24 Jan 2005
Posts: 217
Location: Boston
Followers: 1

Kudos [?]: 5 [0], given: 0

That's it 20,000

Suppose we deposit $1000 at 8.5% and$19,000 at 12.5%

Then the total interest is 85 + 2375 = 2460 < 2500

You can not deposit anything less than 20,000 for 12.5%
VP
Joined: 25 Nov 2004
Posts: 1495
Followers: 6

Kudos [?]: 38 [0], given: 0

let me reword the problem as under:

A has $20,000.00. He/she has two options to make his/her investment: Bond X offers 10% annual coupon intrate rate and Bond Y offers 15% annual coupon interest rate. A plans to make an income of$4500, how much should he invest in X and Y?
Manager
Joined: 24 Jan 2005
Posts: 217
Location: Boston
Followers: 1

Kudos [?]: 5 [0], given: 0

Is that a new question? Or are you trying to rephrase the problem?
SVP
Joined: 03 Jan 2005
Posts: 2250
Followers: 13

Kudos [?]: 216 [0], given: 0

anirban16 wrote:
Is that a new question? Or are you trying to rephrase the problem?

It was a new question from MA, anirban. You can see the numbers are different. And you answer may not answer his question.
Intern
Joined: 02 Dec 2004
Posts: 9
Location: Stockholm, Sweden
Followers: 0

Kudos [?]: 0 [0], given: 0

.125x + .085 (20000-x) = 2500

Solve for x, x = 20000
_________________

The biggest risk in life is not taking one!!!

Director
Joined: 05 Jan 2005
Posts: 561
Followers: 2

Kudos [?]: 12 [0], given: 0

MA wrote:
let me reword the problem as under:

A has $20,000.00. He/she has two options to make his/her investment: Bond X offers 10% annual coupon intrate rate and Bond Y offers 15% annual coupon interest rate. A plans to make an income of$4500, how much should he invest in X and Y?

What am I doing wrong here?

Let's say Mr A. allocated $X and$Y for bond X and Y resp.

0.1x + 0.15y = 4500 (sum of interests for 1 year)
x + y = 20000 (sum of money invested should be 20,000)

I solve for x and y and i get y = 50K and x = -30K
Director
Joined: 25 Jan 2004
Posts: 728
Location: Milwaukee
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Kudos [?]: 12 [0], given: 0

Arsene_Wenger
you are right in your approach, your answer just means that this made up problem is not solvable. I am sure MA was just trying to convey basic concept behind this problem. If you change 20000 to some number heigher than 50000 problem is solvable
_________________

Praveen

VP
Joined: 25 Nov 2004
Posts: 1495
Followers: 6

Kudos [?]: 38 [0], given: 0

anirban16 wrote:
Is that a new question? Or are you trying to rephrase the problem? Anyway the answer is 20,000.

yes, it is rephrased-new question.
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