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) ?

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Mathematics

Reilly Powell

9 September, 14:55

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) ?

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Marshall Ferguson · 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