SOLUTION: Two certificates of deposit pay interest at rates that differ by 4%. Money invested for one year in the first CD earns $140 interest. The same principal invested in the other CD ea

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Question 1143007: Two certificates of deposit pay interest at rates that differ by 4%. Money invested for one year in the first CD earns $140 interest. The same principal invested in the other CD earns $280. Find the two rates of interest.
Answer by math_helper(2461) About Me  (Show Source):
You can put this solution on YOUR website!
Since the interest rates differ by 4% and the interest amount of the higher rate is exactly double that of the lower, the first CD must pay 4% interest and the other CD must pay 8%.

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To see this algebraically: 



 P*r = 140           (1)

 P*(r+0.04) = 280    (2)



  P*r + 0.04P = 280

  140 + 0.04P = 280  <<< subs for P*r from (1)

        0.04P = 140

            P = 140/0.04 = 3500

 

    3500*(r+0.04) = 280

          r+0.04 = 280/3500 

          r+0.04 = 0.08  --->  r = 0.04 (= 4%)