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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%?

  1. 410
  2. 520
  3. 600
  4. 650
  5. 760
Solution

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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