Question

Arvin has $10000 to invest. He invests part in a term deposit paying 5%/year, and the remainder in Canada savings bonds paying 3.4%/year. At the end of the year, he earned simpler interest of $413. How much did he invest at 5%/year?

Answer 1

$4,562.5

Explanation:

The amount Arvin has to invest, P = $10,000

The interest paid on the investment in the term deposit = 5%/year

The interest paid om the investment in Canada savings bonds = 3.4%/year

The amount Arvin earned at the of the year as simple interest, A = $413

Let, x, represent the amount Arvin invested in the term deposit and let, y, represent the amount he invested in Canada savings bonds, we can get the following system of equations

x + y = 10,000...(1)

0.05·x + 0.034·y = 413...(2)

Making y the subject of equation (1) and substituting the value in equation (2), we get;

From equation (1), we get, y = 10,000 - x

Plugging the above value of y in equation (2) gives;

0.05·x + 0.034 × (10,000 - x) = 413

∴ 0.05·x - 0.034·x + 340 = 413

x = (413 - 340)/(0.05 - 0.034) = 4,562.5

Therefore, the amount Arvin invested in the term deposit at 5%, x = $4,562.5

(y = 10,000 - x

∴ y = 10,000 - 4,562.5 = 5,437.5

The amount Arvin invested in Canada savings bonds, y = $5,437.5.)