A recently retired couple needs $12,000 per year to

Chapter 11, Problem 60

(choose chapter or problem)

A recently retired couple needs $12,000 per year to supplement their Social Security. They have $150,000 to invest to obtain this income. They have decided on two investment options: AA bonds yielding 10% per annum and a Bank Certificate yielding 5%. (a) How much should be invested in each to realize exactly $12,000? (b) If, after 2 years, the couple requires $14,000 per year in income, how should they reallocate their investment to achieve the new amount?

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