A mother earned $ 7500.00 from royalties on her cookbook. she set aside 20% of this for a down payment on a new home. the balance will be used for her son's future education. she invests a portion of the money in a bank certificate of deposit (cd account) that earns 4% and the remainder in a savings bond that earns 7%. if the total interest earned after one year is $ 360.00 , how much money was invested at each rate?

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Business

Layne Roy

18 February, 18:29

A mother earned $ 7500.00 from royalties on her cookbook. she set aside 20% of this for a down payment on a new home. the balance will be used for her son's future education. she invests a portion of the money in a bank certificate of deposit (cd account) that earns 4% and the remainder in a savings bond that earns 7%. if the total interest earned after one year is $ 360.00 , how much money was invested at each rate?

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Alisa Meadows · Answer 1

Amount of money deposited in the two accounts is 80% of 7500$.

Amount of money in the two accounts = 0.8 * 7500 = 6000$

Now assume that the amount deposited in CD account is m and the amount deposited in the saving bond is n.

m + n = 6000

Therefore: m = 6000 - n ... > equation I

Now we write another equation expressing the savings:

0.04m + 0.07n = 360 ... > equation II

Substitute with equation I in equation II:

0.04 (6000-n) + 0.07n = 360

240 - 0.04n + 0.07n = 360

0.03n = 120

n = 4000 $

Substitute with n in equation I to get the value of m as follows:

m = 6000 - n = 6000 - 4000 = 2000

Based on these calculations:

The amount of money deposited in the CD = 2000$

The amount of money deposited in the saving account = 4000$