Example

Solving a Savings and Stock Interest Application Using a System of Equations

A system of equations can solve an application with two investments seeking a target overall interest rate. For instance, if Leon has $50,000\$50{,}000 to invest to earn 6.2%6.2\% interest per year, allocating it between a stock fund earning 7%7\% and a savings account earning 2%2\%, let ss and aa represent the amounts in the stock fund and savings account, respectively. The total principal equation is s+a=50,000s + a = 50{,}000. The total interest equation is 0.07s+0.02a=0.062(50,000)0.07s + 0.02a = 0.062(50{,}000). Solving this system provides the optimal allocation: he should invest $42,000\$42{,}000 in the stock fund and $8,000\$8{,}000 in the savings account.

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Updated 2026-04-25

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Ch.4 Systems of Linear Equations - Intermediate Algebra @ OpenStax

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