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12 January, 15:18

A mother earned $11250.00 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 $540.00 , how much money was invested at each rate?

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  1. 12 January, 18:25
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    Investment in CD 4,464 credit

    Investment in bonds 4,464 credit

    Explanation:

    11,250 - 20% = 9,000

    A + B = 9,000

    A = 900 - B

    A x 0.04 + B x 0.07 = 540

    (900-B) x 0.04 + 0.07B = 540

    0.11B = 540 - 36 = 504

    B = 4,536

    A = 9,000 - 4,536 = 4,464
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