Question

The Peace and Development Club raised $5000 for a trip to Guatemala in the future. The club invested part of the money in an account that paid 4% simple interest, and the rest in a government bond that paid 3.5% simple interest per year. After one year, the club earned a total of $190 in interest. How much was invested at each rate?

Answer 1

In the 4% interest account, $3,000 was invested while in the 3.5% interest account, $2,000 was invested

Explanation:

Here, we want to know the amount of money invested in each of the two accounts.

Let the amount invested be $x and $y for each of the two accounts

Since the total invested is $5,000

Mathematically;

x + y = 5000 •••••••(i)

Let’s now work with the interest

for the 4% account, interest will be;

4/100 * x = 4x/100

For the 3.5% account, interest will be;

3.5/100 * y = 3.5y/100

The total amount of interest earned is $190

Thus;

4x/100 + 3.5y/100 = 190

Multiply through by 100

4x + 3.5y = 19000 •••••••(ii)

So we have two equations to solve simultaneously

From i, x = 5000-y

Substitute this into ii

4(5000-y) + 3.5y = 19000

20000-4y + 3.5y = 19000

0.5y = 20,000-19,000

0.5y = 1,000

y = 1,000/0.5

y = $2,000

x = 5,000 - y = 5,000 - 2,000 = $3,000