Problema Solution
2 certificates of deposit pay interest rates that differ by 4%. for the first cd, the money is invested for a year and earned $480 interest. for the second cd the same amount of money invested earned $800 in a year.
What is the interest rate of the second cd?
Answer provided by our tutors
let
x = the interest rate for the first certificate, x>0
x + 0.04 = the interest rate for the second certificate
a = the amount of money invested
or the first cd, the money is invested for a year and earned $480 interest
x*a = 480
a = 480/x
for the second cd the same amount of money invested earned $800 in a year
(x + 0.04)*a = 800
plug a = 480/x into the last equation
(x + 0.04)*(480/x) = 800
by solving we find
x = 0.06
click here to see the step by step solution of the equation
0.06 + 0.04 = 0.1 or 10%
the interest rate of the second cd is 10%.