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The expression 1.05S+1.02B1.05S + 1.02B predicts the end-of-year value of a financial portfolio, where SS is the value of stocks in dollars and BB is the value of bonds in dollars in the portfolio at the beginning of the year. What is the predicted end-of-year value, in dollars, of a portfolio that begins the year with SS dollars in stocks and BB dollars in bonds?

Full solution

Q. The expression 1.05S+1.02B1.05S + 1.02B predicts the end-of-year value of a financial portfolio, where SS is the value of stocks in dollars and BB is the value of bonds in dollars in the portfolio at the beginning of the year. What is the predicted end-of-year value, in dollars, of a portfolio that begins the year with SS dollars in stocks and BB dollars in bonds?
  1. Identify expression: Identify the expression for the end-of-year value. The expression is 1.1x+1.05y 1.1x + 1.05y , where x x is the value of stocks and y y is the value of bonds at the beginning of the year.
  2. Substitute values: Substitute the given values into the expression. Assume x=5000 x = 5000 dollars and y=3000 y = 3000 dollars. Calculate 1.1×5000+1.05×3000 1.1 \times 5000 + 1.05 \times 3000 .
  3. Perform calculations: Perform the calculations: 1.1×5000=5500 1.1 \times 5000 = 5500 and 1.05×3000=3150 1.05 \times 3000 = 3150 .
  4. Add results: Add the results of the calculations: 5500+3150=8650 5500 + 3150 = 8650 .

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