Below is a word problem about a financial situation. Review and share your thoughts about the question and whether you think this word problem is actually relevant to your life and career. If it does not seem relatable what could you change about it to make it more relevant to you and other students. Share your new example along with thoughts on the question. Also respond to at least two of your classmates, discussing relevance and changes to the word problem.



"John received an inheritance of $12,000 that he divided into three parts and invested in three ways: in a money-market fund paying 3% annual interest; in municipal bonds paying 4% annual interest; and in mutual funds paying 7% annual interest. John invested $4,000 more in municipal funds than in municipal bonds. He earned $670 in interest the first year. How much did John invest in each type of fund?" 

### Thoughts on the Original Word Problem

The word problem presents a classic financial situation that involves dividing a sum of money into different investments with varying interest rates. This type of problem is designed to help students practice setting up and solving equations based on financial scenarios. However, while the problem is mathematically sound, it may not feel particularly relevant or relatable to many students, especially if they are not yet involved in managing investments or receiving inheritances.

**Relevance to Life and Career:**
- For students not currently dealing with financial investments, the problem might seem abstract and disconnected from their daily lives. The concept of an inheritance or investing large sums of money might feel distant or irrelevant, particularly for younger students or those not yet exposed to personal finance.
- For students pursuing careers in finance, economics, or business, the problem is directly relevant as it touches on essential skills like understanding interest rates and investment strategies. However, for others, it might feel more meaningful if the context were more directly connected to their current experiences or future plans.

### Making the Problem More Relevant

To make the problem more relatable, we can adjust the context to better align with the experiences of students or individuals who might not yet be dealing with investments or large sums of money. For instance, the problem could be rephrased to involve saving up for a specific goal, which is a more common and relatable scenario for many students.

**New Example:**

"Sarah saved up $1,200 from her summer job, which she decided to divide into three parts and save in three different ways: in a savings account paying 1% annual interest, in a certificate of deposit (CD) paying 2% annual interest, and in a small business fund paying 5% annual interest. Sarah saved $200 more in the CD than in the savings account. After one year, she earned $34 in interest. How much did Sarah invest in each type of savings?"

**Thoughts on the New Example:**
- This scenario is more relatable for students as it involves saving money from a summer job, a common experience for many.
- The smaller amounts make the problem more realistic for a student’s financial situation.
- The focus on saving for a goal (like college, a new gadget, or a trip) makes the concept of interest more immediately relevant and understandable.

### Responding to Classmates

1. **Classmate 1:** If they find the original problem relevant because they are interested in finance or economics, you could discuss how the skills learned in the problem are applicable in more complex financial scenarios and suggest ways to build on this knowledge.
   
2. **Classmate 2:** If they think the problem is irrelevant, you could agree and share your revised version, explaining how changing the context can make the problem more relatable and engaging.

### Follow-Up Questions

1. How do the different interest rates in the new problem affect Sarah’s total earnings after one year?
2. What real-life situations might lead someone to invest in different types of savings accounts or funds?
3. How could Sarah’s investment strategy change if the interest rates were different?
4. What are some advantages and disadvantages of investing in higher-interest accounts or funds?
5. How might the time horizon (e.g., saving for one year versus five years) affect Sarah’s investment decisions?

### Tip
When tackling word problems, try to visualize the scenario or relate it to something familiar in your life; this can make solving the problem more intuitive.

Learn how John invested his $12,000 inheritance into different funds with varying interest rates. Solve the problem step-by-step, including setting up systems of equations to determine how much was invested in each fund type. Suitable for Grades 9-12.

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