Property
To solve problems involving two investments, use the formula for simple interest, I=Prt, where I is the interest, P is the principal, r is the annual interest rate, and t is the time in years. A system of equations is created where one equation represents the sum of the principals, and the second equation represents the sum of the interests earned from each investment.
Total Principal: P1+P2=Total P
Total Interest: I1+I2=Total I
Examples
- Maria invests a total of 12,000 dollars in two separate accounts. One account pays 5% annual interest, and the other pays 7%. Her total interest for the year is 700 dollars. If x is the amount at 5% and y is the amount at 7%, the system is x+y=12000 and 0.05x+0.07y=700.