A total invetment of 10,700 is made into 2 savings accounts. One yields 7% simple interest and the other 9% simple interest.

Question

The investor earns a total of $891.00 interest for the year. How much was invested in the 7% account?

Answer 1

Let x be the amount of money invested in the 7% account.  The amount invested in the 9% account will be $10,700-x.  The formula for simple interest is:

 

I = P*r*t

 

Where:

I = interest earned

P = the Principle = x for one account, $10,700-x for the other

r = the rate = 7% (0.07) for one account and 9% (0.09) for the other

t = years = 1

 

The interest earned in the 7% account is:

 

I_7% = x*(0.07)*1

 

The interest earned in the 9% account is:

 

I_9% = (10,700-x)*(0.09)*1

 

The total interest earned is:

 

Total interest = (0.07)x + (10,700 - x)(0.09) = $891

 

Solve for x:

 

(0.07)x + 963 - (0.09)x = 891

-(0.02)x = -72

 

x = $3600