SOLUTION: If $10,000 and $4,000 are invested such that $1250 is earned in one year and if the rate of interest on the larger investment is 2% more than that of the smaller investment, find t

Question 271742: If $10,000 and $4,000 are invested such that $1250 is earned in one year and if the rate of interest on the larger investment is 2% more than that of the smaller investment, find the rates of interest
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
x = interest rate on larger investment.
x - .02 = interest rate on smaller investment.

formula you want is:

x * 10000 + (x-.02) * 4000 = 1250

simplify this equation to get:

x * 10000 + x * 4000 - .02 * 4,000 = 1250

simplify and combine like terms to get:

x * 14999 - 80 = 1250

add 80 to both sides of the equation to get:

x * 14000 = 1330

divide both sides by 14000 to get:

x = 1330/14000 = .095

this means that x - .02 = .075

.095 * 10000 + .075 * 4000 = 1250 which is correct, confirming these answers are good.

the rate of interest on the 10,000 is .095 = 9.5%

the rate of interest on the 4,000 is .075 = 7.5%

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