Solve the problem.

-Tim invested $87,000 in two plans. Plan 1 is at an APR of 6%, and plan 2 is at an APR of 12%. If he invested $5000 less in plan 2 than in plan 1, how much can he expect to earn in one year?
A) $4920
B) $7980
C) $7680
D) $2760

Question

Solve the problem.

-Tim invested $87,000 in two plans. Plan 1 is at an APR of 6%, and plan 2 is at an APR of 12%. If he invested $5000 less in plan 2 than in plan 1, how much can he expect to earn in one year?
A) $4920
B) $7980
C) $7680
D) $2760

Quizplus · Accepted Answer

Let's call the amount Tim invested in Plan 1 "x". Then we know that the amount he invested in Plan 2 is "x-5000".

To find out how much he can expect to earn in one year, we need to calculate the interest earned on each plan and then add them together.

Interest earned on Plan 1 = x * 0.06 
Interest earned on Plan 2 = (x-5000) * 0.12

Total interest earned = (x*0.06) + ((x-5000)*0.12)

We also know that Tim invested a total of $87,000, so:

x + (x-5000) = 87000 
2x - 5000 = 87000 
2x = 92000 
x = 46000

Now we can substitute x back into our equation for total interest earned:

Total interest earned = (46000*0.06) + ((46000-5000)*0.12) 
Total interest earned = $2760 + $4920 
Total interest earned = $7680

So Tim can expect to earn $7680 in one year. Therefore, the answer is C.

Solve the Problem. -Tim Invested $87,000 in Two Plans. Plan 1 Is at Plan