A mother wants to invest dollar 1100000 for her sons future

A mother wants to invest dollar 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 percent and the remainder in a savings bond that earns 7 percent. If the total interest earned after one year is dollar 660.00: how much money was invested in the CD account? The total interest earned after one year is dollar 660.00. How much money was invested in the CD account? dollar (Round to the nearest cent if necessary.)

Solution

Let the total amount invested in CD account be $ X.

Then amount invested in savings bond will be $ (11,000 - X).

Now applying the formula of simple interest for time as one year and rate of interest specified in the question, we get:

Principal * Rate of interest * Time = Simple Interest

[X * 4% * 1 + (11,000 - X) * 7% * 1] = 660

4X/100 + 11000*7/100 - 7x/100 = 660

110*7 - 3X/100 = 660

770 - 660 = 3X/100

3X/100 = 110

3X = 11000

X = 11000/3

X = $ 3666.67

Therefore, money that was invested in CD account was $ 3,667 (rounding to the nearest cent).