Question

Reggie Means invested part of $31,000 in municipal bonds that earn 7.5% annual simple interest and the remainder of the money in 8.5% corporate bonds. How much is invested in each account if the total annual interest earned is $2,475?

Answer 1

Principal Invested in Municipal Bonds is $16,000

Principal Invested in Corporate Bonds is $15,000

Explanation:

If;

Principal Invested in municipal bonds = a

Principal Invested in corporate bonds = b

then we have;

a + b = $31,000 --------------------------------Equation 1

0.075a + 0.085b = $2,475 ---------------Equation 2

From equation 1 we have;

a = 31,000 - b

By putting the values of a in Equation 2 we get;

0.075 (31,000 - b) + 0.085b = 2,475

2,325 - 0.075b + 0.085b = 2,475

0.01b = 150

b = $15,000

By putting the values of b in equation 1 we get;

a = $16,000