word problem

Question

Josh wishes to sell a property for $240,000. He will finance the property with 2% short-term note and 2.5% long-term note. Find the amount of each note if the total annual interest paid is $5500.

Answer 1

let x = amount at 2.5%; then $240,000 - x = amount at 2%

we know that Interest = Principal x Rate x Time

 

no time is given here, so I will assume 1 year; then

$5500 = 0.025x + (240000 - x)0.02

$5500 = 0.025x + $4800 - 0.02x

$700 = 0.005x

x = $140,000 ; $240,000 - x = $100,000

 

Proof: $140,000•0.025 + $100,000•0.02 = $5500

$3500 + $2000 = $5500