l
An investment of 20000 was made one year ago.
Part of the investment was placed into an account paying s interest at 8%
The remainder of the investment was placed into an account paying s interest at 6%
After one year, you received a total of 900 in interest. How much was invested in each account?
For Fund 1, we invest an unknown amount, let us call it x
For Fund 2, the remaining principal is 20000 - x
Since Fund 1 credits interest using the simple interest method, we have 0.08x
Since Fund 2 credits interest using the simple interest method, we have 0.06(20000 - x)
Interest Paid | Principal | Interest Rate | |
Fund 1 | 0.08x | x | 8% |
Fund 2 | 0.06(20000 - x) | (20000 - x) | 6% |
Total | 900 | 20000 | -- |
Since both Interest paid columns add up to the total interest earned of 900, we set up an equation
0.08x + 0.06(20000 - x) = 900
0.08x + 1200 - 0.06x = 900
1200 + 0.02x = 900
1200 - 1200 + 0.02x = 900 - 1200
0.02x = -300
0.02x | |
0.02 |
= |
-300 |
0.02 |
x = -15000 ← Fund 1 Investment
This means we should 20000 - -15000 = 35000 into Fund 2