Problema Solution
A student inherits $100,000 and decides to invest half. The student has two investments to choose from; the first is a low risk investment that pays an average of 4% simple interest annually, the second has much more risk but averages 9% simple interest per year. If the student hopes to earn $3,000 a year in interest, how much should be deposited in each investment?
Answer provided by our tutors
Let
x = the money invested in a low risk investment that pays 4% simple interest annually
y = the money invested in the investment that pays 9% simple interest annually
x + y = 100000/2
0.04x + 0.09y = 3000
........
click here to see the system of equations solved for x and y
........
x = $30,000
y = $20,000
$30,000 should be invested at 4% and $20,000 at 9%.