7. Suppose a man can invest his money of $90000 in three funds. Fund A has a rat

Question

7. Suppose a man can invest his money of $90000 in three funds. Fund A has a rate of return
of 3%, fund B has a rate of return of 4.5%, fund C has a rate of return of 5%.
(a) If he only invests in fund A and B, how much should he invest in each fund to get a rate of
return of 4%?
(b) If he only invests in fund A and C, how much should he invest in each fund to get a return
$4050?
(c) If he could invest in any fund, come up with a plan (how much to invest in A, B, C
respectively) that will yield a rate of return of 3.5%

Explanation / Answer

7a> A=3% , B=4.5% , C=5% Let investment in A=X so, 3x+(1-x)*4.5=4 or 3x-4.5x=4-4.5 or -1.5x=-0.5 or x=0.5/1.5=0.33 or 33% So invest 33% in A and 67% in B b>Similarly 3x+5(1-x)=4 or 3x-5x=4-5 or -2x=-1 or x=1/2=0.5= 50% So invest 50% in A and 50% in B

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