Question

Jim is investing in the stock market. Jim is hoping to earn $2,000 in interest in order to take a trip to Mexico. Stock A earns 4% interest and Stock B earns 7% interest, and Jim has a total of $32,000 to invest. How much should he invest in each in order to earn $2,000 interest?

Answer 1

Given:

Total amount for investment = $32000

Rate of interest for Stock A = 4%

Rate of interest for Stock B = 7%

Jim is hoping to earn $2,000 in interest.

To find:

The amount of investments in Stock A and Stock B.

Explanation:

Let amount of investments in Stock A = $x

Amount of investments in Stock B = $y

Total amount for investment = $32000

`x+y=32000` ...(i)

Rate of interests in Stock A and Stock B are 4% and 7%. Total interests is $2000.

`0.04x+0.07y=2000` ...(ii)

From (i) and (ii), we get

`0.04x+0.07(32000-x)=2000`

`0.04x+2240-0.07x=2000`

`-0.03x=2000-2240`

`-0.03x=-240`

Divide both sides by -0.03.

`x=(-240)/(-0.03)`

`x=8000`

Put x=8000 in (i).

`8000+y=32000`

`y=32000-8000`

`y=24000`

Therefore, the amount of investments in Stock A and Stock B are $8000 and $24000 respectively.