Question

Sam invested $16,000 in two different stocks. The first stock showed a gain of 12% annual interest while the second stock suffered a 5% loss. If the total annual income from both investments was $1240, how much was invested at each rate?

Answer 1

Answer:

Amount invested in 12% annual interest stock = $12,000

Amount invested in stock incurring 5% loss = $16,000 - $12,000

= $4,000

Explanation:

Data provided in the question:

Total amount invested = $16,000

Let the amount invested in 12% annual interest stock be 'x'

Thus,

The amount invested in 5% loss will be = $16,000 - x

Total annual income = $1,240

Now,

Total annual income = 12% of x + [ -5% of ($16,000 - x)]        

[negative sign depicts the loss]

thus,

$1,240 = 0.12x - 0.05($16,000 - x)

or

$1,240 = 0.12x - 800 + 0.05x

or

1240 + 800 = 0.17x

or

2040 = 0.17x

or

x = $12,000

Therefore,

Amount invested in 12% annual interest stock = $12,000

Amount invested in stock incurring 5% loss = $16,000 - $12,000

= $4,000