Answer:
Amount invested in 12% annual interest stock = $12,000
Amount invested in stock incurring 5% loss = $16,000 - $12,000
= $4,000
Explanation:
Data provided in the question:
Total amount invested = $16,000
Let the amount invested in 12% annual interest stock be 'x'
Thus,
The amount invested in 5% loss will be = $16,000 - x
Total annual income = $1,240
Now,
Total annual income = 12% of x + [ -5% of ($16,000 - x)]
[negative sign depicts the loss]
thus,
$1,240 = 0.12x - 0.05($16,000 - x)
or
$1,240 = 0.12x - 800 + 0.05x
or
1240 + 800 = 0.17x
or
2040 = 0.17x
or
x = $12,000
Therefore,
Amount invested in 12% annual interest stock = $12,000
Amount invested in stock incurring 5% loss = $16,000 - $12,000
= $4,000
