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Fernando invested money in a 5-yr CD (certificate of deposit) that returned the equivalent of 3.3% simple interest. He invested S1000 less in a 18-month CD

that had a 2% simple interest return. If the total amount of interest from these investments was $945.00, determine how much was invested in each CD.

User Ldurniat
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Final answer:

By setting up a system of equations, we determined that Fernando invested $5000 in the 5-yr CD at a 3.3% simple interest rate and $4000 in the 18-month CD at a 2% simple interest rate, to obtain a total interest of $945.

Step-by-step explanation:

The goal is to find out how much was invested in each CD. Considering that the 5-year CD has a 3.3% simple interest rate and the 18-month CD has a 2% simple interest rate, we can set up a system of equations to determine the initial investment amounts. Let's denote the amount invested in the 5-yr CD as x and the amount invested in the 18-month CD as x - 1000.

The simple interest earned on the 5-yr CD can be calculated using the formula Interest = Principal × Rate × Time. For the 5-yr CD, the interest would be x × 0.033 × 5, and for the 18-month CD, it would be (x - 1000) × 0.02 × 1.5.

Setting up the equation based on the total interest earned from both CDs being $945, we get: x × 0.033 × 5 + (x - 1000) × 0.02 × 1.5 = 945. If we solve this equation, we'll find the values for x.

Upon solving, we can summarize the equation as: 0.165x + 0.03x - 30 = 945 → 0.195x = 975 → x = 5000. Therefore, the amount invested in the 5-yr CD is $5000 and the amount invested in the 18-month CD is $4000 (which is $5000 - $1000).

User JoseV
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