Vincente and ricarda perez have invested $27,000 in bonds paying 7%. How much additional money should they invest in a certificate of deposit paying 4% simple interest so that the total return on the two investments will be 6%?

Question

Cassidy Ramsey

Mathematics

11 October, 20:25

Vincente and ricarda perez have invested $27,000 in bonds paying 7%. How much additional money should they invest in a certificate of deposit paying 4% simple interest so that the total return on the two investments will be 6%?

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Velez · Answer 1

Invested amount = $27,000

Interest is getting 7% on $27,000 of bonds.

Let us assume additional money should invest = $x.

Interest payed on additional money invested = 4%.

Total money invested = 27,000 + x.

Total interest on both amount should be equal to = 6%.

We can setup an equation as

7% of starting invested amount + 4% of additional invested amount = 6% of total invested amount.

0.07 * 27,000 + 0.04 x = 0.06 (27,000+x).

On simplifying, we get

1890 + 0.04x = 0.06 (27000+x).

Distributing 0.06 over (27000+x), we get

1890 + 0.04x = 1620 + 0.06x

Subtracting 0.04x from both sides, we get

1890 + 0.04x-0.04x = 1620 + 0.06x - 0.04x

1890 = 1620 + 0.02x

Subtracting 1620 on both sides

1890 - 1620 = 1620 - 1620 + 0.02x.

270 = 0.02x.

Dividing both sides by 0.02, we get

270/0.02 = 0.02x/0.02

13500 = x.

Therefore, $13500 is the additional money should they invest.