Based on the total annual income from simple interest, $2000 was invested in Account 1 while $3000 was invested in Account 2.
What is simple interest?
Simple interest the amount of interest charged on a sum at a given rate and for a given period of time.
- Simple interest = Principal × rate × time
In simple interest, the principal amount is always the same.
Given that the principal is $5000
This amount was invested into two account at the following rates:
Account 1 at 4.5% interest rate
Account 2 at 6% interest rate
Total income from simple interest = $250
Let amount invested in Account 1 be y; amount invested in Account 2 will be 5000 - y
Interest on Account 1 = y × 4.5% × 1 = 0.045y
Interest on Account 2 = (5000 - y) × 6% × 1 = 300 - 0
06y
0.045 y - 0.06y + 300 = 270
-0.015 y = -30
y = 2000
5000 - y = 3000
Therefore, $2000 was invested in Account 1 while $3000 was invested in Account 2.
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