Mr. Ahmed is going to invest $20,000 in two accounts. He is going to invest in an individual retirement account (IRA) paying 4% annual interest and in a certificate of deposit (CD) paying 2% annual interest. Mr. Ahmed wants to earn $700 in annual interest. How much should he invest in each account?(1 point)
Let x be the amount invested in the IRA paying 4% annual interest and 20000 - x be the amount invested in the CD paying 2% annual interest.
The interest earned from the IRA is 0.04x and the interest earned from the CD is 0.02(20000 - x).
According to the given information, Mr. Ahmed wants to earn $700 in annual interest:
0.04x + 0.02(20000 - x) = 700
0.04x + 400 - 0.02x = 700
0.02x + 400 = 700
0.02x = 300
x = 15000
Therefore, Mr. Ahmed should invest $15,000 in the IRA and $5,000 in the CD to earn $700 in annual interest.