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16 March, 19:54

Vincente and ricarda perez have invested $27,000 in bonds paying 7%. How much additional money should they invest in a certificate of deposit paying 4% simple interest so that the total return on the two investments will be 6%?

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  1. 16 March, 20:06
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    Invested amount = $27,000

    Interest is getting 7% on $27,000 of bonds.

    Let us assume additional money should invest = $x.

    Interest payed on additional money invested = 4%.

    Total money invested = 27,000 + x.

    Total interest on both amount should be equal to = 6%.

    We can setup an equation as

    7% of starting invested amount + 4% of additional invested amount = 6% of total invested amount.

    0.07 * 27,000 + 0.04 x = 0.06 (27,000+x).

    On simplifying, we get

    1890 + 0.04x = 0.06 (27000+x).

    Distributing 0.06 over (27000+x), we get

    1890 + 0.04x = 1620 + 0.06x

    Subtracting 0.04x from both sides, we get

    1890 + 0.04x-0.04x = 1620 + 0.06x - 0.04x

    1890 = 1620 + 0.02x

    Subtracting 1620 on both sides

    1890 - 1620 = 1620 - 1620 + 0.02x.

    270 = 0.02x.

    Dividing both sides by 0.02, we get

    270/0.02 = 0.02x/0.02

    13500 = x.

    Therefore, $13500 is the additional money should they invest.
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