Application Problems

Question

You have a total of $10,000 to invest in two simple interest accounts. On one account the annual simple interest rate is 3.5%. On the second account the annual simple interest rate is 7.5%. If you earn $520 per year from these two investments, how much do you have invested in each account?

x=amount at 3.5%

y=amount at 7.5%

Answer 1

Hi Jerica,

 

Using the variables you've defined,

 

x=amount at 3.5%
y=amount at 7.5%

 

We know from the first sentence

 

X + Y = 10000

or X = 10000 - Y

 

From the 2nd and 3rd sentences

.035X + .075Y = 520

 

Let's substitute 10000 - Y for X in the above equation

 

.035(10000-Y) + .075Y = 520

 

350 - .035Y + .075Y = 520

350 + .04Y = 520

.04Y = 170

Y = 4250

and

X = 10000 - Y = 10000 - 4250 = 5750

 

So the following amounts are invested

$5,750 @ 3.5%

and

$4,250 @ 7.5%