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On January 1, 1981, Nick wins $150,000 in the lottery and he invests the entire amount...

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cbromm | Honors

Posted July 11, 2013 at 2:49 AM via web

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On January 1, 1981, Nick wins $150,000 in the lottery and he invests the entire amount in two stocks, stock X and stock Y.  At the end of 1981, he sells both stocks for a total profit of $30,000.  If he earned 14% on stock X and 29% of stock Y, how much did he invest in each stock?

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ishpiro | Teacher | (Level 1) Associate Educator

Posted July 11, 2013 at 3:01 AM (Answer #1)

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The simple interest formula is I = Prt, where P is the principal (amount invested), r is the interest rate expressed as a decimal and t time in years. In this problem time is t = 1 year.

If Nick invested $x in stock X, his interested earned from this stock is `I_x = 0.14x`

If Nick invested $yin stock Y, his interested earned from this stock is `I_y=0.29y`

The total amount invested is x + y = 150,000 and the total interest earned is `I_x+I_y = 0.14x+0.29y = 30,000`

This is a system of equations with two variables. It can be solved by elimination.

Multiply the first equation by 0.14:

0.14x + 0.14y = 0.14*150,000=21,000

0.14x +0.29y = 30,000

Subtracting first equation from the second, get

0.15y = 9,000

`y=9,000/0.15 =60,000 `

Then x = 150,000 - 60,000 = 90,000.

The amount invested in stock X is $90,000 and the amount invested in stock Y is 60,000.

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