Problema Solution
To pay for their child's college education, the parents invested $10,000, part in a certificate of deposit paying 8.5% annual interest, the rest in a mutual fund paying 7% annual interest. The annual income from the certificate of deposit is $200 more than the annual income from the mutual fund. How much money was put into each type of investment?
Answer provided by our tutors
Let x = the amount invested in a certificate of deposit
Let y = the amount invested in a mutual fund
Then
x+y=10000 (1)
0.085x =0.07y+200 (2)
From (1) y=10000-x
Using (2)
0.085x=0.07(10000-x)+200
0.085x+0.07x=700+200
0.155x=900
x=900/0.155
x=5,806.45
and y = 10,000-5,806.45= 4,193.55
$5,806.45 invested in a certificate deposit and $4,193.55 invested in a mutual fund