Question

An investor owns two pieces of property. One, worth twice as much as the other, returns 6% in annual interest, while the other returns 4%. Find the value of each piece of property if the total annual interest earned is $8000.

Answer 1

The value of the smaller property is $50,000, and the value of the larger property is $100,000.

Step-by-step explanation:

Let's assume the value of the smaller property is 'x'. So, the value of the larger property would be '2x', as it is worth twice as much. The total annual interest earned is $8000, with one property returning 6% and the other returning 4%. We can set up the equation:

0.06 * (2x) + 0.04 * x = 8000

Simplifying the equation, we get:

0.12x + 0.04x = 8000

Combining like terms, we have:

0.16x = 8000

Dividing both sides of the equation by 0.16, we find:

x = 50000

Therefore, the smaller property is worth $50000, and the larger property is worth twice that amount, which is $100000.