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20 September, 10:39

Martin purchased municipal bonds that yield 7% annually and certificates of deposit which yield 9% annually.

If Martin's initial investments amount to $11,000 and the annual income is $830, how much money is invested in bonds and how much is invested in certificates of deposit?

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  1. 20 September, 10:47
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    the amount invested in municipal bond is $8,000

    the amount invested in certificated on deposits = $11,000 - $8,000

    = $3,000

    Explanation:

    Data provided in the question:

    Annual yield on municipal bond = 7% = 0.07

    Annual yield on certificated of deposits = 9% = 0.09

    Initial investment = $11,000

    Annual income = $830

    Now,

    Let the amount invested in municipal bond be 'x'

    Therefore,

    the amount invested in certificated of deposits = $11,000 - x

    Thus,

    according to question

    ⇒ 0.07x + 0.09 ($11,000 - x) = $830

    ⇒ 0.07x + $990 - 0.09x = $830

    ⇒ - 0.02x = $830 - $990

    ⇒ - 0.02x = - $160

    ⇒ x = $8,000

    Hence,

    the amount invested in municipal bond is $8,000

    the amount invested in certificated on deposits = $11,000 - $8,000

    = $3,000
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