Question

Vartan was paid $25,000 for a cell phone app that he wrote and wants to invest it to save for his son's education. He wants

to put some of the money into a bond that pays 4% annual interest and the rest into stocks that pay 9% annual interest. If

he wants to earn 7.4% annual interest on the total amount, how much money should he invest in each account?

The money invested into bond is $8000

The money invested into stocks is $17,000

Step-by-step explanation:

* Lets explain how to solve the problem

- Vartan wants to invest $25,000

- He wants to put some of the money into a bond that pays 4% annual

interest and the rest into stocks that pay 9% annual interest

- He wants to earn 7.4% annual interest on the total amount

- We need to know how much money he should invest in each account

- Assume that he will put $x into the bond that pays 4% annual interest

- He will put the rest into stocks that pay 9%

- The rest = 25,000 - x

∴ The money earns = (4/100) (x) + (9/100) (25,000 - x)

∴ The money earns = 0.04 x + 2250 - 0.09 x

∴ The money earns = 2250 - 0.05 x ⇒ (1)

∵ He wants to earn 7.4% annual interest on the total amount

∵ Total amount is $25,000

∴ The money earns = (7.4/100) (25,000)

∴ The money earns = 1850 ⇒ (2)

- Equate (1) ans (2)

∴ 2250 - 0.05 x = 1850

- Add 0.05 x to both sides

∴ 2250 = 0.05 x + 1850

- Subtract 1850 from both sides

∴ 400 = 0.05 x

- Divide both sides by 0.05

∴ x = 8,000

∴ 25,000 - 8,000 = 17,000

∵ x represents the money invested into the bond

∵ 25,000 - x represents the money invested into the stocks

∴ The money invested into bond is $8000

∴ The money invested into stocks is $17,000