Simple Interest

Question

Phyllis invested 32000 dollars, a portion earning a simple interest rate of 5 percent per year and the rest earning a rate of 7 percent per year. After one year the total interest earned on these investments was 1800 dollars. How much money did she invest at each rate?

Answer 1

Let x = the portion earning 5% simple interest

Then 32000-x = portion earning 7% simple interest.

 

If the total interest earned was 1800 for one year, we can set up the following formula.

 

.05x + .07(32000-x) = 1800

 

Then solve algebraically

 

.05x + 2240 - .07x = 1800

 

440 = .02x

x = 22,000

 

So $22,000 was invested at 5% and 

$10,000 (ie 32000-22000) was invested at 7%.