A mother wants to invest $11,000.00 for her son's future education She invests a portion of the money in a bank certificate of deposit (CD account) which earns 4% and the remainder in a savings bond that earns 7%.
The total interest earned after one year is $660.00.
How much money was invested in the CD account? $_____
(Round to the nearest cent, if necessary.)
Commercial deposits or CD are the short term debt instrument issued by an organization, the period is generally less than a year. Interest on CD are generally charged on the basis of simple interest system.
Answer and Explanation:
Let the amount invested in CD = X
Let the amount invested in Savings deposits (SD) = Y
X+Y = 11000 ....... .. . ....... (1)
Interest in one year = invested amount * interest rate
Interest on CD = .04X
Interest on SD = .07Y
Y= 11000 - X...........(3)
Using 3 and 2
.04X + .07(11000-X) =660
.04X + 770 -.07X =660
-.03X = -110
X = the money invested in CD = $3667
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from Financial Accounting: Help and ReviewChapter 5 / Lesson 18