Question

Fernando invested money in a 4-yr CD (certificate of deposit) that returned the equivalent of 5.2% simple interest. He invested

Answer 1

Answer: $5000; $2000

Step-by-step explanation:

Simolw interest is calculated as: PRT/100

where,

P = principal

R = rate

T = time

Let the money in the 4-yr cd be represented by y.

Since rate = 5.2%

Simple interest = (y × 5.2 × 4)/100

Since he invested $3000 less in a 18-month CD, Let the money in the 18-month CD be represented by (y - $3000).

Then, S.I = [(y - $3000) × 3 × 1.5]/100

The total interest = $1130

We then equate the two simple interest together. This will be:

= (y × 5.2 × 4)/100 + (y - $3000) × 3 × 1.5]/100 = $1130

0.208y + 0.045(y - $3000) = $1130

0.208y + 0.045y - $135 = $1130

0.253y = $1130 + $135

0.253y = $1265

y = $1265/0.253

y = $5000

The money invested in 4-yr CD = $5000

The money invested in the 18-month CD = $5000 - $3000 = $2000