Question

Ralph Chase plans to sell a piece of property for $135000. He wants the money to be paid off in two ways - a short-term note at 9% interest and a long-term note at 7% interest. Find theamount of each note if the total annual interest paid is $10850

Answer 1

Let x be the value of the short-term note and y the value of the long-term note without consider the interes.

In this case, we have:

I) x + y = 135000

II) 0.09x + 0.07y = 10850

Multiplying equation I by 7 and equation II by 100, we have:

III) 7x + 7y = 945000

IV) 9x + 7y = 1085000

Subtracting equation III from equation IV, we have:

V) 2x = 140000, which implies x = 140000/2 = $70000

Therefore, y = 135000 - 70000 = $65000

Considering the interest, we have 1.09*70000 = $76300 for the first note and 1.07*65000 = $69550 for the second