Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The...
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Transcript of Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The...
![Page 1: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/1.jpg)
Solving Investment Problems
![Page 2: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/2.jpg)
Investment Problems
Investment problems have three parts:
1. The principal – the amount being invested
2. The rate – the % that the money will earn
3. The income – the earnings from the investment
![Page 3: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/3.jpg)
The problem
Mary has just retired and has 60,000.00 available to invest. She is considering bonds at an interest rate of 13% and CD’s at an interest rate of 3%. If she wants to earn income of exactly 6,000.00 per year from these investments, how much money should she invest in each?
![Page 4: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/4.jpg)
Tic – tac - toe
Many problems are easiest to solve using boxes.
Principal Rate Income
Bonds
CD
Total
![Page 5: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/5.jpg)
Fill the boxes with the information from the story.
bonds at an interest rate of 13% (write the % as a decimal)
Principal Rate Income
Bonds .13
CD
Total
![Page 6: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/6.jpg)
Fill the boxes with the information from the story.
CD at an interest rate of 3% (write the % as a decimal)
Principal Rate Income
Bonds
CD .03
Total
![Page 7: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/7.jpg)
Fill the boxes with the information from the story.
60,000.00 available to invest
Principal Rate Income
Bonds
CD
Total 60,000
![Page 8: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/8.jpg)
Fill the boxes with the information from the story.
income of exactly 6,000.00
Principal Rate Income
Bonds
CD
Total 6,000
![Page 9: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/9.jpg)
Tic – tac - toe
This is what we already know:
Principal Rate Income
Bonds .13
CD .03
Total 60,000 6,000
![Page 10: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/10.jpg)
Tic – tac - toe
You don’t know how much was invested in bonds, so call that x.
Principal Rate Income
Bonds x .13
CD .03
Total 60,000 6,000
![Page 11: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/11.jpg)
Be smarter than the average bear!
You don’t know how much was invested in either bonds or CD’s. You know the total is 60,000 and you have called the amount invested in bonds x.
If you ever manage to figure out what x is, how will you find the amount invested in CD’s?
You’ll take x away from the total of 60,000.
Let’s do it!
![Page 12: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/12.jpg)
Tic – tac - toe
Show the amount in CD’s as the total minus x
Principal Rate Income
Bonds x .13
CD 60,000 - x .03
Total 60,000 6,000
![Page 13: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/13.jpg)
Tic – tac - toe
Multiply across: principal X rate = income
Principal Rate Income
Bonds x .13 .13x
CD 60,000 - x .03 .03 ( 60,000 – x )
Total 60,000 6,000
![Page 14: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/14.jpg)
Add down
You always add down because:
Income from bonds + Income from CD’s_____________________
Total Income
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Add down the last column
.13x + .03(60,000 - x) = 6,000
Principal Rate Income
Bonds x .13 .13x
CD 60,000 - x .03 .03(60,000 – x)
Total 60,000 6,000
![Page 16: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/16.jpg)
Solve the problem!
.13x + .03(60,000 - x) = 6,000.13x + 1800 - .03x = 6000
.10x +1800 = 6000.10x = 4200x = 42,000
and 60,000 – x = 18,000
![Page 17: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/17.jpg)
Be sure you answer the question!
how much money should she invest in each? x = 42,000
and60,000 – x = 18,000
She should invest 42,000 in bonds and 18,000 in CDs.
![Page 18: Solving Investment Problems. Investment Problems Investment problems have three parts: 1.The principal – the amount being invested 2.The rate – the %](https://reader035.fdocuments.in/reader035/viewer/2022062423/5697bf991a28abf838c91aef/html5/thumbnails/18.jpg)
Tic-tac-toe Problems
• Make your boxes• Fill in the information you
know• Use your head• Multiply across• Add down• Solve the problem• Make sure you answer the
question that is being asked!