A mother earned $ 8750.00 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 $420.00 , how much money was invested at each rate?

Question

Mathematics

Paloma Fowler

5 September, 10:34

A mother earned $ 8750.00 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 $420.00 , how much money was invested at each rate?

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Ronan Mendoza · Answer 1

The problem statement is not clear regarding which money is invested. We will assume it is the 80% of $8750 that is set aside for future education. That amount is

... 0.80 * $8750 = $7000

If x represents the amount invested at 7%, then the total interest earned is

... (7000 - x) * 4% + (x) * 7% = 420

... 280 + 0.03x = 420

... x = 140/0.03 ≈ 4666.67

$4666.67 was invested at 7%.

$2333.33 was invested at 4%.