Question

A mother wants to invest $6000 for her children's education. She invests a portion of the money in a bank certificate of deposit (CD account) which earns 4% and the remainder in a savings bond that earns 7%. If the total interest earned after one year is $360, how much money was invested at each rate?

Answer 1

Let us assume the amount of money invested in CD = x
Then
Amount of money invested in savings bond = 6000 - x
Percentage of interest in CD = 4%
Percentage of interest in savings bond = 7%
Amount of interest gained in 1 year = $360
Now
0.04x + [(6000 - x) * 0.07] = 360
0.04x + 420 - 0.07x = 360
0.03x = 60
x = 2000
Then
Amount of money invested in the CD account = $2000
Amount of money invested in savings bond = 6000 - 2000
= 4000 dollars