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March 29, 2017

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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?

  • Math - ,

    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.

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