SOLUTION: a mother earned 10000.00 from royalties on her cookbook. she aside 20% of this for a down payment on a new home. the balance will be used for her sons future education. she invests

Click here to see ALL problems on Money Word Problems

Question 975078: a mother earned 10000.00 from royalties on her cookbook. she aside 20% of this for a down payment on a new home. the balance will be used for her sons future education. she invests a portion of the money in a bank certificate of deposit that earns 4% and the remainder in a savings bond that earns 7%. if the total interest earned after one year is 480.00, how much money was invested at each rate?

Answer by solver91311(24713) (Show Source):
You can put this solution on YOUR website!

The first thing you need to do is to calculate how much money was invested at interest.

Calculate 20% of $10,000. Then subtract that amount from $10,000 to determine the amount that was invested at interest for the son's education fund. I'll let you do that arithmetic. In the meantime, until you calculate the amount, we can call the amount invested meaning the present value of the investment.

Let represent the portion of the amount that was invested at 7%. Then the portion that was invested at 4% must be .

The actual amount of interest earned on dollars invested at 7% simple interest is . The actual amount of interest earned on dollars invested at 4% simple interest is . These two amounts add up to $480.00, hence:

Once you have calculated the value of , substitute that amount into the equation and solve for , which will be the amount invested at 7%. Subtract that amount from which will be the amount invested at 4%.

John

My calculator said it, I believe it, that settles it