Two certificates of deposit pay interest at rates that differ by 4%. Money invested for one year in the first CD earns $175 interest. The same principal invested in the other CD earns $315. Find the two rates of interest.

Question

Carissa Fritz

Mathematics

5 November, 16:13

Two certificates of deposit pay interest at rates that differ by 4%. Money invested for one year in the first CD earns $175 interest. The same principal invested in the other CD earns $315. Find the two rates of interest.

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Answers (1)

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Boris · Answer 1

We are told that the principle is the same for both investments so we can say:

315=P (r+4) / 100 and 175=Pr/100 solving both for P you have:

P=31500 / (r+4) and P=17500/r since P=P:

17500/r=31500 / (r+4)

175 (r+4) = 315r

175r+700=315r

-140r+700=0

-140r=-700

r=5

So the rates are 5% and (5+4) = 9%

check ...

P (9/100) = 315 and P (5/100) = 175

P=31500/9 and P=17500/5

P=157500/45 and P=157500/45

So P=P

note: P=$3500

3500 (9/100) = $315

3500 (5/100) = $175