Answer: He should invest $44000 in fund A and $11000 in fund B.
Step-by-step explanation:
Let x represent the amount which he invested in fund A.
Let y represent the amount which he invested in fund B.
Vern sold his 1964 Ford Mustang for $55,000 and wants to invest the money to earn him 3.6% interest per year. He will put some of the money into Fund A that earns 2% per year and the rest in Fund B that earns 10% per year.. This means that
x + y = 55000
The formula for determining simple interest is expressed as
I = PRT/100
Considering fund A,
P = $x
T = 1 year
R = 2℅
I = (x × 2 × 1)/100 = 0.02x
Considering fund B,
P = $y
T = 1 year
R = 10℅
I = (y × 10 × 1)/100 = 0.1y
The interest that he wants to earn on the total amount in a year is 3.6%. The interest would be
I = (55000 × 3.6 × 1)/100 = 1980
Therefore,
0.02x + 0.1y = 1980 - - - - - - - - - -1
Substituting x = 55000 - y into equation 1, it becomes
0.02(55000 - y) + 0.1y = 1980
1100 - 0.02y + 0.1y = 1980
- 0.02y + 0.1y = 1980 - 1100
0.08y = 880
y = 880/0.08
y = 11000
x = 55000 - y = 55000 - 11000
x = 44000
