An investor has $75,000 to invest in a CD and a mutual fund. The CD yields 9% and the mutual fund yields 8%. The mutual fund requires a minimum investment of $10,000, and the investor requires that at least twice as much should be invested in CDs as in the mutual fund. How much should be invested in CDs and how much in the mutual fund to maximize the return? What is the maximum return? To maximize income, the investor should place $__ in CDs and $__ in the mutual fund.

Marco Hudson

Marco Hudson

Answered question

2022-08-06

An investor has $75,000 to invest in a CD and a mutual fund. The CD yields 9% and the mutual fund yields 8%. The mutual fund requires a minimum investment of $10,000, and the investor requires that at least twice as much should be invested in CDs as in the mutual fund. How much should be invested in CDs and how much in the mutual fund to maximize the return? What is the maximum return? To maximize income, the investor should place $__ in CDs and $__ in the mutual fund.

Answer & Explanation

Jaiden Gould

Jaiden Gould

Beginner2022-08-07Added 11 answers

let
x = amount invested into CD
y = amount invested into mutual funds
so following becomes linear programming
maximize 0.09x+0.08y
subject to
x + y 75000 y 10000 x 2 y x , y 0
now solving this linear programming problem graphically we get
x = 65000
y = 10000
so amound invested into CD = 65000
amount invested into mutual funds = 10000

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