Mr. Rivera invest a part of P85,000.00 in a mortgage which pays 6% interest; and the...
Mr. Rivera invest a part of P85,000.00 in a mortgage which pays 6% interest; and the rest in bonds paying 5% interest. The annual income from the bonds is twice the income from the mortgage. How much is invested in each of the 2 kinds of investment.
Homework Answers
Mr. Rivera invest = 85,000
Lets say X from 85,000 is invested into mortgage which pays interest of 6% while (85,000 - X) is invested in bonds paying 5% interest.
Future value of mortgage after one years = X * 1.06 = 1.06X. Income from mortgage is 1.06X - X = 0.06X
Future value of bonds after one years = (85,000 - X) * 1.05 = 89,250 - 1.05X. Income from bonds is 89,250 - 1.05X - 85,000 + X = 4,250 - 0.05X
Annual income from bonds is double from the mortgage, thus 4,250 - 0.05X = 2 * 0.06X
0.17X = 4,250
X = 25,000
Thus, money invested in mortgage is 1,500 while invested in bonds is 3,000
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