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30 September, 01:04

Ralph Chase plans to sell a piece of property for $170000. He wants the money to be paid off in two waysminusa short-term note at 10 % interest and a long-term note at 8 % interest. Find the amount of each note if the total annual interest paid is $15400.

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  1. 30 September, 03:17
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    Amount of short term note = $90,000

    Amount of long term note = $80,000

    Step-by-step explanation:

    Data provided in the question:

    Total amount = $170,000

    Interest rate of short term note = 10%

    Interest rate in long term note = 8%

    Total annual interest paid = $15,400

    Now,

    Let the amount of short term interest be 'x'

    thus,

    amount of long term interest will be ($170,000 - x)

    also,

    Interest on short term note + Interest on long term note = Total interest

    or

    ⇒ 0.10 * x + 0.08 * ($170,000 - x) = $15,400

    or

    0.1x + $13,600 - 0.08x = $15,400

    0.02x = $15,400 - $13,600

    or

    0.02x = $1,800

    or

    ⇒ x = $90,000

    Hence,

    Amount of short term note = $90,000

    Amount of long term note = $170,000 - $90,000 = $80,000
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