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An investment of 7000 was made one year ago.
Part of the investment was placed into an account paying s interest at 7%
The remainder of the investment was placed into an account paying s interest at 11%
After one year, you received a total of 640 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 7000 - x
Since Fund 1 credits interest using the simple interest method, we have 0.07x
Since Fund 2 credits interest using the simple interest method, we have 0.11(7000 - x)
Interest Paid | Principal | Interest Rate | |
Fund 1 | 0.07x | x | 7% |
Fund 2 | 0.11(7000 - x) | (7000 - x) | 11% |
Total | 640 | 7000 | -- |
Since both Interest paid columns add up to the total interest earned of 640, we set up an equation
0.07x + 0.11(7000 - x) = 640
0.07x + 770 - 0.11x = 640
770 - 0.04x = 640
770 - 770 - 0.04x = 640 - 770
-0.04x = -130
-0.04x | |
-0.04 |
= |
-130 |
-0.04 |
x = 3250 ← Fund 1 Investment
This means we should 7000 - 3250 = 3750 into Fund 2