Question

Ralph Chase plans to sell a piece of property for ​$170000. He wants the money to be paid off in two waysminusa ​short-term note at 10​% interest and a​ long-term note at 8​% interest. Find the amount of each note if the total annual interest paid is ​$15400.

Answer 1

Amount of short term note = $90,000

Amount of long term note = $80,000

Explanation:

Data provided in the question:

Total amount = $170,000

Interest rate of short term note = 10%

Interest rate in long term note = 8%

Total annual interest paid = $15,400

Now,

Let the amount of short term interest be 'x'

thus,

amount of long term interest will be ($170,000 - x)

also,

Interest on short term note + Interest on long term note = Total interest

or

⇒ 0.10 × x + 0.08 × ($170,000 - x) = $15,400

or

0.1x + $13,600 - 0.08x = $15,400

0.02x = $15,400 - $13,600

or

0.02x = $1,800

or

⇒ x = $90,000

Hence,

Amount of short term note = $90,000

Amount of long term note = $170,000 - $90,000 = $80,000