I'm having a hard time figuring out where to start on this problem.
"If Ben invests $4000 at 4% interest per year, how much additional money must be invested at 5½% annual interest to ensure that the interest he receives each year is 4½% of the total amount invested?"
Thanks for the help.
Sep 8th 2009, 09:49 PM
Your question isn't as detailed as I might like, but it might have been given to you that way, so I'll work with what I have. I'm assuming that we are only worried about the first year (this problem would not have solution if we needed to get 4.5% of the total every year after considering compound interest).
So as to how to start this, you know a few things.
Let A represent the additonal investment, after the first 4000.
because you gain 4% interest on the 4000 and 5.5% on the additional investment.
because we want to earn 4.5% of the total amount invested
So as far as I can tell, to solve your question you need to make the interest gained equal to the desired interest and then solve for A.
That should be a pretty good start. Let me know if you're still having trouble.