Problema Solution

Leticia has been tracking two volatile stocks. Stock A over the last year has increased 10%, and stock B has increased 15% (using a simple interest model). She has $10,000 to invest and would like to split it between these two stocks. If the stocks continue to perform at the same rate, how much should she invest in each to result in a balance of $11,400?

Answer provided by our tutors

Let

a = money invested in Stock A

b = money invested in Stock B

Total money invested is $10,000:

a + b = 10,000

The resulting balance after 1 year is $11,400:

1.10a + 1.15b = 11,400

We need to solve the following system of equations:

a + b = 10000

1.10a + 1.15b = 11400

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click here to see the step by step solution of the system of equations

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a = $2,000

b = $8,000

Leticia invested $2,000 in Stock A and $8,000 in Stock B.