Question

Suppose $1,000 is divided into two bank accounts. One account pays 1% simple interest per year and the other pays 2.5%. After three years there is a total of $55 in interest between the two accounts. How much was invested into the bank account that pays 1% simple interest (rounded to the nearest cent)?

Answer 1

Call the 1% account X After 3 years the interest it earned is X times 1% for 3 years =X(.01)(3) =0.03X The 2.5% account has (1000 - X) dollars It earns (1000-X(.025)(3) =(1000 - X)(.075) =75-.075X The total of the interest is 55 Therefore .03X + 75 -.075X = 55 - .045X = 55 - 75 -.045X = -20 .045X = 20 45X =20000 X = 20000 / 45 X = $ 444.44 Therefore the amount invested id the 2.5% account is 1000 - 444.44 =$ 555.56