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3 December, 07:26

A mother wants to invest $6000 for her children's education. She invests a portion of the money in a bank certificate of deposit (CD account) which earns 4% and the remainder in a savings bond that earns 7%. If the total interest earned after one year is $360, how much money was invested at each rate?

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  1. 3 December, 08:02
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    Let us assume the amount of money invested in CD = x

    Then

    Amount of money invested in savings bond = 6000 - x

    Percentage of interest in CD = 4%

    Percentage of interest in savings bond = 7%

    Amount of interest gained in 1 year = $360

    Now

    0.04x + [ (6000 - x) * 0.07] = 360

    0.04x + 420 - 0.07x = 360

    0.03x = 60

    x = 2000

    Then

    Amount of money invested in the CD account = $2000

    Amount of money invested in savings bond = 6000 - 2000

    = 4000 dollars
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