What is the interest rate for each investment?

Question

$1500 is invested in a fund that pays an annual interest rate of X%. $3000 is invested in a fund that pays an annual interest rate of Y%. The combined annual interest from both funds is $210. The interest rate on the $3000 investment is one percentage point higher than the interest rate on the $1500 investment. What is the interest rate for each investment? 

Answer 1

The interest from the first investment is 

($1500)(X)

 

The interest from the second investment is 

($3000)(Y)

 

The total interest from both equals $210, so

 

1500X + 3000Y = 210

 

You also know that Y% is one percentage point higher than X%, so when you change the percentages to decimals, 

 

Y = X + .01

 

Substitute the second equation into the first

 

1500X + 3000(X + .01) = 210

 

1500X + 3000X + 30 = 210

 

4500X = 180

 

X = 0.04, or 4%

 

Substituting this value for X into the second equation

 

Y = X + .01

Y = .04 + .01 = .05, or 5%

 

Let's check:

 

1500(.04) + 3000(.05) = 210 ?

60 + 150 = 210 ?

210 = 210 YES! So this is the right answer