SOLUTION: Two certificates of deposit pay interest at rates that differ by 4%. Money invested for one year in the first CD earns $120 interest. The same principal invested in the other CD ea
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Question 1109514: Two certificates of deposit pay interest at rates that differ by 4%. Money invested for one year in the first CD earns $120 interest. The same principal invested in the other CD earns $200. Find the two rates of interest. Found 2 solutions by jorel1380, greenestamps:Answer by jorel1380(3719) (Show Source):
You can put this solution on YOUR website! Let 2000 be the amount of principal invested. Let n/100 be the rate of interest on the first CD and n+4/100 be the amount paid on the second CD. Then:
2000(n/100)=120
2000(n+4/100)=200
20n=120
20n+80=200
n=6
n+4=10
If 2000 was deposited at 6%, and another 2000 was invested at 10%, then you would have 120 and 200 interest at their respective rates
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In the other tutor's answer, he starts with $2000 as the amount invested in each CD. In fact the conditions of the problem lead to the fact that the amount is $2000... but you can't start with that fact to solve the problem.
The additional $80 interest is because of the 4% higher interest rate. That means the amount invested is $80/.04 = $2000.
Then, since $2000 is invested in each CD, interest of $120 means an interest rate of 120/2000 = .06 = 6%; and interest of $200 means an interest rate of 200/2000 = .10 = 10%.
