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5 February, 08:16

You inherit one hundred thousand dollars. You invest it all in three accounts for one year. The first account pays 4% compounded annually, the second account pays 3% compounded annually, and the third account pays 2% compounded annually. After one year, you earn $3,650 in interest. If you invest five times the money in the account that pays 4% compared to 3%, how much did you invest in the 4% account?

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  1. 5 February, 10:06
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    Let x = amount invested in the 1st account

    y = amount invested in the 2nd account

    z = amount invested in the 3rd account

    Because the total investment is $100,000, therefore

    x + y + z = 100,000 (1)

    Interest earned in one year from the accounts is $3,650, therefore

    0.04x + 0.03y + 0.02z = 3,650

    or

    4x + 3y + 2z = 365,000 (2)

    Because x = 5y, therefore obtain these 2 equations:

    5y + y + z = 100,000

    or

    6y + z = 100,000 (3)

    4 * (5y) + 3y + 2z = 365,000

    or

    23y + 2z = 365,000 (4)

    Substitute z=1000,000 - 6y from (3) into (4).

    23y + 2 (100,000 - 6y) = 365,000

    23y + 200,000 - 12y = 365,000

    11y = 165,000

    y = $15,000

    Therefore

    x = 5y = $75,000

    z = 100,000 - 6y = $10,000

    Answer:

    The amounts invested are

    1st account: $75,000

    2nd account: $15,000

    3rd account: $10,000
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