Question

The Fiedler family has up to $130,000 to invest. They decide that they want to have at least $40,000 invested in stable bonds yielding 5.5% and that no more than $60,000 should be invested in more volatile bonds yielding 11%. How much should they invest in each type of bond to maximize income if the amount in the stable bond should not exceed the amount in the more volatile bond? What is the maximum income?

Answer 1

130,000 - 60,000 (volatile bonds) = $70,000 left but they do not want to invest more in the stable bond than the $60,000 they invested in the more volatile bond, so they would put $60,000 in each and have $10,000 left, investing only $120,000.  The question said they had up to $130,000 to invest but with the conditions listed, they are only going to invest $120,000.

60,000 x 11.0 = $6600.00

60,000 x 5.5 =    3300.00

Max Income of $9900.00