SOLUTION: How would I begin to solve this word problem. A total of $20,000 is to be invested, some in bonds and some in certificates of deposit (CDs). If the amount invested in bonds is to e

Question 221954: How would I begin to solve this word problem. A total of $20,000 is to be invested, some in bonds and some in certificates of deposit (CDs). If the amount invested in bonds is to exceed that in CDs by $3,000, how much will be invested in each type of investment?
I know I am suppose to use this formula A=P(1+rt)
Answer by solver91311(24713) (Show Source): You can put this solution on YOUR website!

will do you no good whatsoever in solving the problem you stated.

Let

represent the amount to be invested in CDs. Then the amount to be invested in bonds is

. Together these amounts add up to $20K, so:

Solve for

to get the amount invested in CDs, add 3000 to get the amount invested in bonds. THEN, if you know the bond and CD interest rates AND the term of the investment AND you assume that both the bonds and CDs will earn simple interest (not generally true), you can use the formula:

To calculate the Future Value of the investments.

John

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