Investments

[HorseWhisperz]

So, my boyfriend asked me to help him with his homework, which is a subject I haven't touched since two years ago when I was a sophomore in high school. I know I'm smarter than to let this problem get to me the way it does. Perhaps I'm just kind of tired and not thinking too clearly, but it just makes no sense in my mind...

Here is the problem I was given:

Assume you have $2400 to invest for 1 year. You can make a safe investment that yields 4% interest a year or a risky investment that yields 8% a year. If you want to combine safe and risky investments to make $120 a year, how much of the $2400 should you invest at the 4% interest? How much at the 8% interest?

Would someone be able to solve it for me and give a 'refresher' in my mind how these problems work? Thank you.

 

[Deleted member 4993]

So, my boyfriend asked me to help him with his homework, which is a subject I haven't touched since two years ago when I was a sophomore in high school. I know I'm smarter than to let this problem get to me the way it does. Perhaps I'm just kind of tired and not thinking too clearly, but it just makes no sense in my mind...

Here is the problem I was given:

Assume you have $2400 to invest for 1 year. You can make a safe investment that yields 4% interest a year or a risky investment that yields 8% a year. If you want to combine safe and risky investments to make $120 a year, how much of the $2400 should you invest at the 4% interest? How much at the 8% interest?

Would someone be able to solve it for me and give a 'refresher' in my mind how these problems work? Thank you.

Assume:

Amount of risky investment = R...................................Interest from risky investment = 0.08 * R

Amount of safe investment = 2400 - R ..........................Interest from safeinvestment = 0.04 * (2400 - R)

Then

0.08 * R + 0.04 * (2400 - R) = 120

Now continue.....

 

[stapel]

Note the "amount" expressions provided in the previous reply. It is very common that the two amounts will be of the form "(some variable)" for the one amount and "(some expression)" for whatever is left. And this "whatever is left" is given by "(the total) minus (the variable for the first amount)".

Keep this construction in mind. You will need it later!

 

[HorseWhisperz]

Wow. That was easy. I completely remember that now.

It was $1,800 in safe investments and $600 in a risky investment. Thank you so much for all your help!