A business allocates $7.2 million between two investments. It invests

Question

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A business allocates $7.2 million between two investments. It invests the smaller portion in currencies and the remainder in real estate. The combined return on the investments for the first year is $846,000. If the investment in real estate exceeds the currency investment by $3 million, find the rate of return on each investment.

Piyush786767 · Answer

11.75
11.75

Nsingh06 · Answer

Can someone please share the solution for this?

Sajjad1994 · Answer

Official Explanation

Because the total of the two investments and the difference between them are both known, it is possible to determine that the smaller investment (x) is $2.1 million and the larger (x + $3 million) is $5.1 million: x + x + $3 million = $7.2 million, so 2x = $4.2 million, and x = $2.1 million.

The combined return is 11.75% of the total amount, suggesting that the interest rates are among the higher choices, so begin by finding 13.5% of $5.1 million = $688,500. Subtract that from the total return of $846,000 to get $157,500. Divide $157,500 by $2.1 million to find that the second interest rate was 7.5%.

varad98 · Answer

Hi, why can't both investment provide returns of 11.75%? Its not mentioned in the question stem that interest rate for both investments have to be different.

Nikkz99 · Answer

There's no mention of allocation for the Currency and Real Estate is done with equal weightage. So, why  2x  comes here in the equation?  Sajjad1994   bb   Bunuel  or any other person / expert?

Sajjad1994 · Answer

x = investment 1

as we know, the second investment is 3 million greater than first investment hence second investment would equal to x + 3 million and sum of both investment would equal to x + x + 3 million and x + x + 3 million = 2x+ 3 million.

Sajjad1994 · Answer

The official explanation is correct, but the language of the question is ambigious, so bear it as it is.

Parvez786 · Answer

Sajjad1994  bb Bunuel - why can't both be 11.75 .
11.75 % return on each investment gives 846,000 as the total return.

Sajjad1994 · Answer

Because the statement of the question was said as such. Read the last line of the question. Also, read the OE.

Thank you!

bumpbot · Answer

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Rate of return on real estate	Rate of return on currencies
		2.2%
		3.8%
		7.5%
		9.1%
		11.75%
		13.5%

A business allocates $7.2 million between two investments. It invests

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