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Exercise 3.2 · Q19

Q.A trust fund has ₹ 30,000 that must be invested in two different types of bonds. The first bond pays 5% interest per year, and the second bond pays 7% interest per year. Using matrix multiplication, determine how to divide ₹ 30,000 among the two types of bonds. If the trust fund must obtain an annual total interest of:

(a) ₹ 1800
(b) ₹ 2000
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Write the two conditions (total investment and total interest) as a matrix equation Ax=bA\mathbf{x}=\mathbf{b} and solve using x=A−1b\mathbf{x}=A^{-1}\mathbf{b}. (a) For ₹1800 interest: ₹15,000 in the 5% bond and ₹15,000 in the 7% bond. (b) For ₹2000 interest: ₹5,000 in the 5% bond and ₹25,000 in the 7% bond.

Setting it up

Let xx = amount in the first bond (5%) and yy = amount in the second bond (7%). The two conditions are:

x+y=30000,0.05x+0.07y=I,x + y = 30000, \qquad 0.05x + 0.07y = I,

where II is the target interest. In matrix form:

[110.050.07][xy]=[30000I].\begin{bmatrix} 1 & 1 \\ 0.05 & 0.07 \end{bmatrix}\begin{bmatrix} x \\ y \end{bmatrix} = \begin{bmatrix} 30000 \\ I \end{bmatrix}.

Inverting the coefficient matrix

For A=[abcd]A = \begin{bmatrix} a & b \\ c & d \end{bmatrix}, A−1=1ad−bc[d−b−ca]A^{-1} = \dfrac{1}{ad-bc}\begin{bmatrix} d & -b \\ -c & a \end{bmatrix}.

Here det⁡(A)=(1)(0.07)−(1)(0.05)=0.02≠0\det(A) = (1)(0.07) - (1)(0.05) = 0.02 \neq 0, so

A−1=10.02[0.07−1−0.051]=[3.5−50−2.550].A^{-1} = \frac{1}{0.02}\begin{bmatrix} 0.07 & -1 \\ -0.05 & 1 \end{bmatrix} = \begin{bmatrix} 3.5 & -50 \\ -2.5 & 50 \end{bmatrix}.

Thus …

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