Solve the Problem. -A Retired Couple Has $170,000 to Invest to Obtain Annual

question 187

Multiple Choice

Solve the problem.
-A retired couple has $170,000 to invest to obtain annual income. They want some of it invested in safe Certificates of Deposit yielding 5%. The rest they want to invest in AA bonds yielding 11% per year. How much
Should they invest in each to realize exactly $16,300 per year?

• A) $120,000 at 5% and $70,000 at 12%
• B) $130,000 at 5% and $60,000 at 12%
• C) $130,000 at 12% and $60,000 at 5%
• D) $140,000 at 12% and $50,000 at 5%

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Definitions:

Investing Activity

A category in the cash flow statement that shows how much money has been spent on or gained from investment operations, excluding amounts related to day-to-day operations.

Indirect Method

A method for preparing the cash flow statement where net income is adjusted for non-cash transactions, deferred income, and changes in working capital to compute net cash from operating activities.

Statement Of Cash Flows

A financial report summarizing the amount of cash and cash equivalents entering and leaving a company.

Book Value

The net value of a company's assets as recorded on its balance sheet, minus its liabilities and intangible assets, such as goodwill.