A mother earned $ 18750.00 18750.00 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 $ 900.00 900.00 , how much money was invested at each rate? How much money was invested in the CD account? $ nothing (Round to the nearest cent.)

Question

Emmalee Oconnor

Business

6 February, 01:06

A mother earned $ 18750.00 18750.00 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 $ 900.00 900.00 , how much money was invested at each rate? How much money was invested in the CD account? $ nothing (Round to the nearest cent.)

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Answers (1)

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Atticus · Answer 1

a) $ 5000, $ 10000 b) $ 5000

Explanation:

The royalties money = $18750

She set aside 20% for new home which = 0.2 * 18750 = $ 3750

Amount remaining = 18750 - 3750 = $15000

She invested a sum in a bank certificate of deposit

let the amount invested in bank certificate = y

profit from the investment in the bank = 0.04y

second investment amount = 15000 - y

profit of investment = 0.07 (15000 - y)

sum of the two profit = 0.04y + 0.07 (15000 - y) = total profit = $ 900

0.04y + 0.07 (15000 - y) = 900

open the bracket and rearrange the equation

0.04y + 1050 - 0.07y = 900

0.04y - 0.07y = 900 - 1050

-0.03y = - 150

divide both side by - 0.03

y = - 150 / - 0.03 = $ 5000

The amount of money invest at 4% is $5000

The amount of money invested at 7% = 15000 - 5000 = $10000

The amount of money invested in CD account = $ 5000