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| Step 1. Read the problem. |
A chart will help us organize the information. |
| Step 2. Identify what we are looking for. |
We are looking for the amount to invest in each fund. |
| Step 3. Name what we are looking for. |
Let s= the amount invested in stocks. b= the amount invested in bonds. |
| Write the interest rate as a decimal for each fund. Multiply: Principal · Rate · Time to get the Interest. |
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| Step 4. Translate into a system of equations. We get our system of equations from the Principal column and the Interest column. |
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| Step 5. Solve the system of equations Solve by elimination. Multiply the top equation by −0.03. |
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| Simplify and add to solve for s. |
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| To find b, substitute s = 32,800 into the first equation. |
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| Step 6. Check the answer in the problem. |
We leave the check to you. |
| Step 7. Answer the question. |
Adnan should invest $32,800 in stock and $7,200 in bonds. |
Did you notice that the Principal column represents the total amount of money invested while the Interest column represents only the interest earned? Likewise, the first equation in our system, s + b = 40,000, represents the total amount of money invested and the second equation, 0.08s + 0.03b = 0.071(40,000), represents the interest earned.