Math Problem Statement

Country Day's scholarship fund receives a gift of $ 135000. The money is invested in stocks, bonds, and CDs. CDs pay 4.25 % interest, bonds pay 2.4 % interest, and stocks pay 8.7 % interest. Country day invests $ 15000 more in bonds than in CDs. If the annual income from the investments is $ 8112.5 , how much was invested in each vehicle?

Solution

Let's define the amounts invested in CDs, bonds, and stocks as follows:

  • Let xx represent the amount invested in CDs.
  • Since the amount invested in bonds is $15,000 more than the amount invested in CDs, the amount invested in bonds will be x+15000x + 15000.
  • The total investment is $135,000, so the amount invested in stocks will be the remaining amount, which is 135000(x+(x+15000))135000 - (x + (x + 15000)).

The income from each investment is the principal amount times the respective interest rate:

  • The CDs generate an income of 0.0425x0.0425x.
  • The bonds generate an income of 0.024(x+15000)0.024(x + 15000).
  • The stocks generate an income of 0.087(135000(x+(x+15000)))0.087(135000 - (x + (x + 15000))).

The total income from all investments is $8,112.50, so we can set up the following equation:

0.0425x+0.024(x+15000)+0.087(135000(x+(x+15000)))=8112.50.0425x + 0.024(x + 15000) + 0.087(135000 - (x + (x + 15000))) = 8112.5

Now, we will solve this equation step by step.

Step 1: Expand the equation

First, expand all the terms:

0.0425x+0.024(x+15000)+0.087(1350002x15000)=8112.50.0425x + 0.024(x + 15000) + 0.087(135000 - 2x - 15000) = 8112.5

0.0425x+0.024x+0.024×15000+0.087×(135000150002x)=8112.50.0425x + 0.024x + 0.024 \times 15000 + 0.087 \times (135000 - 15000 - 2x) = 8112.5

0.0425x+0.024x+360+0.087(1200002x)=8112.50.0425x + 0.024x + 360 + 0.087(120000 - 2x) = 8112.5

Step 2: Simplify the terms

Now combine like terms:

(0.0425+0.024)x+360+0.087×1200000.087×2x=8112.5(0.0425 + 0.024)x + 360 + 0.087 \times 120000 - 0.087 \times 2x = 8112.5

0.0665x+360+104400.174x=8112.50.0665x + 360 + 10440 - 0.174x = 8112.5

0.0665x0.174x+10800=8112.50.0665x - 0.174x + 10800 = 8112.5

0.1075x+10800=8112.5-0.1075x + 10800 = 8112.5

Step 3: Solve for xx

Now isolate xx:

0.1075x=8112.510800-0.1075x = 8112.5 - 10800

0.1075x=1687.5-0.1075x = -1687.5

x=1687.50.1075x = \frac{-1687.5}{-0.1075}

x=15700x = 15700

Step 4: Find the amounts invested in bonds and stocks

  • The amount invested in CDs is x=15700x = 15700.
  • The amount invested in bonds is x+15000=15700+15000=30700x + 15000 = 15700 + 15000 = 30700.
  • The amount invested in stocks is 135000(15700+30700)=13500046400=88600135000 - (15700 + 30700) = 135000 - 46400 = 88600.

Final Answer:

  • CDs: $15,700
  • Bonds: $30,700
  • Stocks: $88,600

Would you like further clarification or details on any step?


Here are 5 related questions for further exploration:

  1. How would the total income change if the interest rates for bonds were increased by 1%?
  2. What would happen if the total investment amount were decreased by 10%?
  3. How can you verify that the total interest income matches the given income of $8112.5?
  4. If the amount invested in CDs doubled, what would the new income be?
  5. How would the solution change if no extra money was invested in bonds?

Tip: When solving word problems involving investments, always double-check your interest calculations to ensure they match the problem's conditions.

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Math Problem Analysis

Mathematical Concepts

Algebra
Linear Equations
Investment Income Calculation

Formulas

Income from investment = Principal × Rate
Total investment = Amount in CDs + Amount in Bonds + Amount in Stocks
Income equation: 0.0425x + 0.024(x + 15000) + 0.087(135000 - (x + (x + 15000))) = 8112.5

Theorems

Properties of Linear Equations

Suitable Grade Level

Grades 9-12