A Trust Account Manager Has $220,000 to Be Invested

question 161

Multiple Choice

A trust account manager has $220,000 to be invested. The investment choices have current yields of 8%, 7%, and 10%. Suppose that the investment goal is to earn interest of $16,400, and risk factors make it prudent to invest some money in all three investments. What is the minimum amount that will be invested at 7%, and in this case how much will be invested at the other rates? ​

• A)$100,000 at 8%, $0 at 7%, $120,000 at 10%
• B)$90,000 at 8%, $110,000 at 7%, $20,000 at 10%
• C)$95,000 at 8%, $115000 at 7%, $10,000 at 10%
• D)$100,000 at 8%, $120,000 at 7%, $0 at 10%
• E)$90,000 at 8%, $130,000 at 7%, $0 at 10%

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Definitions:

Machine-Hours

A unit of measurement representing the operating time of a machine, used in the calculation of manufacturing costs and machinery utilization.

Activity-Based Costing

A pricing approach that allocates overhead and indirect expenses to corresponding products and services according to their engagement in activities.

Overhead Costs

Expenses related to the operation of a business that cannot be directly linked to a specific product or service, such as utilities and administration salaries.

Indirect Labor

Labor costs not directly associated with the manufacture of products or performance of services, such as maintenance and supervision.