Question

A total of $32,000 is invested in two municipal bonds that pay 4.25% and 6.25% simple interest. The investor wants an annual interest income of $1680 from the investments. What amount should be invested in the 4.25% bond?

Answer 1

$16000 invested in 4.25% and 16000 invested in 6.25%

Explanation:

Let x be the amount invested in 4.25% and y be the amount invested in 6.25%

4.25%= 0.0425

6.25%= 0.0625

`x+y= 32000`

subtract x from both sides

`y= 32000-x`

total interest earned is 1680

`0.0425x+0.0625y=1680`

`0.0425x+0.0625(32000-x)=1680`

Now solve for x and y

`0.0425x+2000-0.0625x=1680`

subtract 2000 from both sides

`-0.02x=1680-2000`

`-0.02x=-320`

divide by -0.02 from both sides

x=16000

`y= 32000-x`

`y= 32000-16000=16000`