Posted by Heather on .
A customer purchased a car and financed $16,000. The customer borrowed part of the money from a bank charging 10% annual interest and the rest from a credit union at 8% annual interest. If the total interest for the year was $1,390 how much was borrowed from the bank and how much was borrowed from the credit union?
Set this up as an algebra problem in two variables. Let X be borrowed at 10% and Y be borrowed at 8%. Here is what you know:
X + Y = 16,000
0.10X + 0.08Y = 1390
Solve by substitution, or by multiplying the second equation by 10 and subtracting from the first.
X + 0.8Y = 13900
0.2Y = 2100
Y = 10,500
Now solve for X. It is the rest of the $16,000.