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Interest Problems
 

These problems are based on the formula

INTEREST = AMOUNT × TIME × RATE


Often, the key to these problems is that the interest earned from one account plus the interest earned from another account equals the total interest earned:

Total Interest = (Interest from first account) + (Interest from second account)


An example will illustrate.

 

Example:

A total of $1200 is deposited in two savings accounts for one year, part at 5% and the remainder at 7%. If $72 was earned in interest, how much was deposited at 5%?


(A) 410

(B) 520

(C) 600

(D) 650

(E) 760


Let x be the amount deposited at 5%. Then 1200 –– x is the amount deposited at 7%. The interest on these investments is .05x and .07(1200 –– x). Since the total interest is $72, we get

.05x + .07(1200 –– x) = 72

.05x + 84 –– .07x = 72

––.02x + 84 = 72

––.02x = ––12

x = 600
 

The answer is (C).





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