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Investment problem

  1. Sep 5, 2004 #1
    A man invest $1800 at 9/2 % and $2000 at 5%. How much must he invest at 6% so that the average income on the three investments will be 5% ?
    =============================================

    I set an equation and solved, then found he must invest -$1322 at 6% :surprised
    What does the negative sign mean ? Probably I have made a mistake. If so please let me know.
    Thanks
     
  2. jcsd
  3. Sep 5, 2004 #2
    What equation did you use? Did you use continuous interest or regular interest?
     
  4. Sep 5, 2004 #3

    Tide

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    I think you made an arithmetic error or set up the equations incorrectly. I came up with a positive number.
     
  5. Sep 5, 2004 #4
    Was the number 1322 or not ?
     
  6. Sep 5, 2004 #5

    Tide

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    No it was not.
     
  7. Sep 5, 2004 #6
    My equation is :
    [(0.045)(1800) + 0.05(2000) + 0.06(x)] / 3 = 0.5(1800 + 2000 +x)
     
  8. Sep 5, 2004 #7
    So please help me to finde the right answer.
     
  9. Sep 5, 2004 #8
    I'm sorry, I misread your question.
     
  10. Sep 5, 2004 #9

    Tide

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    That should be 0.05 and NOT 0.5 on the right hand side.
     
  11. Sep 5, 2004 #10
    You mean everything is ok except that 0.5 ?
     
  12. Sep 5, 2004 #11

    Tide

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    Actually there is another problem - you don't need to divide by 3 on the left hand side! The 0.05 on the right side assures that you have the average interest rate correct!
     
  13. Sep 5, 2004 #12
    Ok, thanks a lot.
     
  14. Sep 5, 2004 #13

    Tide

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    Most welcome!
     
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