Question

A person has $10,100 to invest in two different stock. Stock ABC costs $32 per share and pays dividends of $1.20 per share. Stock XYZ costs $23 per share and pays dividends of $1.40 per share. If she wants to earn a total of $540 in dividends, how much should be invested in company ABC?

Answer 1

Solution-

Total amount available for investment =$10100

Suppose person purchase X shares of ABC Company & Y shares of XYZ company

And

X dividend of ABC company & Y dividend of XYZ company

Equation 1 :

X*32 + Y*23= $10100

Equation 2:

X*1.20 + Y*1.40= $540

Multiply equation 2 by 10

12X + 14Y = 5400

Multiply equation 1 by 3 and equation 2 by 8

Equation 1: 96X + 69Y = 30300

Equation 2: 96X + 112Y = 43200

Subtract 1 equation from 2nd equation

43Y = 12900

Y = 300

Put Y =300 in equation 1

96X + 69*300= 30300

96X + 20700= 30300

96X = 30300-20700

96X = 9600

X = 9600/96

X =100

Money to be invested in ABC Company = 100*32= $3200