Question

Neal invested $120,000 in stocks and bonds. He earned 18% on his stock investments and 12% on his bond investments. If Neal's combined profits on both types of investments were $17,400, how much did he invest in stocks?​

Answer 1

$50,000

Explanation:

The given relations can be used to write and solve an equation for the amount invested in stocks.

Setup

Let s represent the amount invested in stocks. Then (120,000-s) is the amount invested in bonds. The total earnings by the two investments were ...

0.18s +0.12(120,000 -s) = 17,400

Solution

Simplifying the equation, we have ...

0.06s +14,400 = 17,400

0.06s = 3000 . . . . . . . . . . subtract 14,400

s = 50,000 . . . . . . . . . . . . divide by 0.06

Neal invested $50,000 in stocks.

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Additional comment

The amount invested in bonds was 70,000. The profit earned was ...

0.18(50,000) +0.12(70,000) = 9,000 +8,400 = 17,400