A mother wnats to invest $6,000 for her son's future education. She invests a portion of the money in a bank certificate of deposit which earns 4% and the remaainder is a savings bond that earns 7%. If the total interest earned after one year is $360.00, how much money was invested in the CD account?
A mother wnats to invest $6,000 for her son's future education. She invests a portion of the money in a bank certificate of deposit which earns 4% and the remaainder is a savings bond that earns 7%. If the total interest earned after one year is $360.00, how much money was invested in the CD account?
To solve this problem, we can set up a system of equations. Let's say the amount of money invested in the CD account is x, and the remaining amount invested in the savings bond is 6000 - x.
The interest earned from the CD account is calculated by multiplying the amount invested by the interest rate (0.04, since 4% is equivalent to 0.04): x * 0.04.
The interest earned from the savings bond is calculated similarly: (6000 - x) * 0.07.
According to the problem, the total interest earned from both investments is $360.00. So we can set up the following equation:
x * 0.04 + (6000 - x) * 0.07 = 360
Solving this equation will give us the amount invested in the CD account (x).
To solve the equation, we can start by simplifying it:
0.04x + 420 - 0.07x = 360
Now, let's combine like terms:
-0.03x + 420 = 360
Next, subtract 420 from both sides of the equation:
-0.03x = -60
To isolate x, divide both sides of the equation by -0.03:
x = 2000
Therefore, $2,000 was invested in the CD account.