A Money Manager Invests $\$ 1,000,000$ Of Her Client's Money into Three Types of Funds

question 84

Essay

A money manager invests $\$ 1,000,000$ of her client's money into three types of funds. It's estimated that Fund A will return $2 \%$ over the next year, Fund B $5 \%$ , and Fund C $11 \%$ . She decides to invest equal amounts in Fund A and Fund B and her client hopes to get a $\$ 45,500$ annual return. How much should she invest at each rate?

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Definitions:

Capital Expenditures

Capital expenditures are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Additions

Refers to increases or expenses added to a specific account, often relating to assets like buildings or equipment.

Extraordinary Repairs

Infrequent expenditures that extend an asset’s life (such as a new engine in a car).

Betterments

Improvements that increase the efficiency of an asset by adding accessories or replacing parts with more effective/powerful ones.