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?

Question

Greenie

Mathematics

2 March, 01:21

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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America Frazier · Answer 1

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