a mother wants to invest 5000 for her sons future education. She invests a portion of the money in a bank certificate of deposit which earns 4% and the remainder in a savings bond that earns 7%. If the total interest earned after one year is $300.00,how much money was invested in the CD account
a mother wants to invest 5000 for her sons future education. She invests a portion of the money in a bank certificate of deposit which earns 4% and the remainder in a savings bond that earns 7%. If the total interest earned after one year is $300.00,how much money was invested in the CD account
Let's call the amount invested in the bank certificate of deposit (CD) "x".
Since the total investment is $5000, the amount invested in the savings bond can be calculated as $5000 - x.
Now, let's calculate the interest earned on the money invested in the CD:
Interest from CD = x * 4% = 0.04x
Similarly, let's calculate the interest earned on the money invested in the savings bond:
Interest from savings bond= (5000 - x) * 7% = 0.07(5000 - x)
The total interest earned is given as $300.00:
0.04x + 0.07(5000 - x) = 300
Now, let's solve this equation to find the value of x:
0.04x + 350 - 0.07x = 300
-0.03x = -50
x = -50 / (-0.03)
x ≈ $1666.67
Therefore, approximately $1666.67 was invested in the bank certificate of deposit.
To find out how much money was invested in the CD account, let's assume the amount invested in the CD account is x dollars.
According to the given information, the remaining amount invested in the savings bond would be (5000 - x) dollars.
The interest earned from the CD account is calculated using the formula: Interest = Principal x Rate
So, the interest earned from the CD account would be: Interest from CD = x * 4% = 0.04x
The interest earned from the savings bond is calculated similarly: Interest from Savings Bond = (5000 - x) * 7% = 0.07(5000 - x)
The total interest earned from both investments is given as $300.00, so we can write the equation:
0.04x + 0.07(5000 - x) = 300
Now, let's solve this equation to find the value of x:
0.04x + 350 - 0.07x = 300
-0.03x = -50
x = -50 / -0.03
x = 1666.67
Therefore, the mother invested approximately $1666.67 in the CD account.