Question

An investor decides to invest some cash in an account paying 12% annual interest, and to put the rest in a stock fund that ends up earning 8% over the course of a year. The investor puts $1200 more in the first account than in the stock fund, and at the end of the year finds the total interest from the two investments was $860. How much money was invested at each of the two rates? Round to the nearest integer.

Answer 1

Let's assume the amount invested in the stock fund is x dollars.

According to the given information, the amount invested in the account paying 12% annual interest would be (x + $1200) dollars.

Now, let's calculate the interest earned from each investment:

Interest from the account paying 12% interest = (x + $1200) * 0.12

Interest from the stock fund earning 8% interest = x * 0.08

The total interest earned from both investments is $860:

(x + $1200) * 0.12 + x * 0.08 = $860

Simplifying the equation:

0.12x + $144 + 0.08x = $860

0.20x = $716

x ≈ $3580

So, approximately $3580 was invested in the stock fund.

The amount invested in the account paying 12% interest would be:

(x + $1200) ≈ ($3580 + $1200) ≈ $4780

Therefore, approximately $3580 was invested in the stock fund and approximately $4780 was invested in the account paying 12% interest.