Question

Stephanie inherited $40,000. She wants to put some of the money in a certificate of deposit that pays 2.1% interest per year and the rest in a mutual fund account that pays 6.5% per year. How much should she invest in each account if she wants to earn 5.4% interest per year on the total amount?

Answer 1

$10000 in certificate of deposit

$30000 in mutual funds

Step-by-step explanation:

Step 1:

Total amount Stephanie has inherited = $40000

Let x be the amount she should put in certificate of deposit.

So 40000-x is the amount to be deposited in mutual funds

Step 2:

Total interest she wants to earn is 5.4% of $40000 = 5.4*40000/100 = 2160

Interest from certificate of deposit  = 2.1% of x = 2.1 * x /100

Interest from mutual funds is 6.5% = 6.5(40000-x)/100

Sum of the interest from both these equals 2160

so 2.1 * x /100 + 6.5(40000-x)/100 = 2160

=> 0.021x/100 + 2600-0.065x = 2160

=> -0.044x = -440 => x= 10000

Step 3 :

Hence Stephaine should invest $10000 in certificate of deposit and (40000-10000) = $30000 in mutual funds