Section 1.2 Applications of Linear Equations in One Variable 61 Answer 4. $6.60 Solution: Let x original wholesale cost. Label the variables. The selling price of the book is based on the original cost of the book plus the bookstore’s markup. 1Selling price2 1original price2 1markup2 Verbal model 1Selling price2 1original price2 1original price markup rate2 179.20 x 1x210.402 Mathematical equation 179.20 x 0.40x 179.20 1.40x Combine like terms. Simplify. 179.20 1.40 x x 128 The original wholesale cost of the textbook was $128.00. Interpret the results. Skill Practice 4. An online bookstore gives a 20% discount on paperback books. Find the original price of a book that has a selling price of $5.28 after the discount. 4. Applications Involving Principal and Interest Solving an Investment Growth Application Example 5 Miguel had $10,000 to invest in two different mutual funds. One was a relatively safe bond fund that averaged 4% return on his investment at the end of 1 yr.The other fund was a riskier stock fund that averaged 7% return in 1 yr. If at the end of the year Miguel’s portfolio grew to $10,625 ($625 above his $10,000 investment), how much money did Miguel invest in each fund? Solution: This type of word problem is sometimes categorized as a mixture problem. Miguel is “mixing” his money between two different investments.We have to determine how the money was divided to earn $625. The information in this problem can be organized in a chart. (Note: There are two sources of money: the amount invested and the amount earned.) 4% Bond Fund 7% Stock Fund Total Amount invested ($) x (10,000 x) 10,000 Amount earned ($) 0.04x 0.07(10,000 x) 625 Because the amount of principal is unknown for both accounts, we can let x represent the amount invested in the bond fund. If Miguel spends x dollars in the bond fund, then he has (10,000 x) left over to spend in the stock fund. The return for each fund is found by multiplying the principal and the percent growth rate.
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