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.

Step-by-step 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.

$x=\dfrac{-240}{-0.03}$

$x=8000$

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.