This Question: 13 pts 25 of 25 This Test: 265 pls poss EOuestion Hep A mother wa

Question

This Question: 13 pts 25 of 25 This Test: 265 pls poss EOuestion Hep A mother wants to invest $12,000 00 for her son's future education. She invests a porton of he morey n a bank centide ofdepost (CD accout) whch 6ans 4% and the remardr n a sangs bond that earns 7%ifthetdal interest eamed after one year is $720 00, how much money was invested in the CD account? The total interest earned after one year is $720.00 How much money was invested in the CD account? s (Round to the nearest cent, & necessary) Enter your answer in the answer box or Later 8

Explanation / Answer

Let us assume amount invested in CD account be Y. Therefore , the amount invested in saving bond will be $12000 - Y The total future value of investment after 1 year = $12000 + $750 = $12,750 Using future value of sum formula , we can calculate the value of Y. Future value of amount invested in CD account = Y*(1+0.04)^1 Future value of amount invested in saving bond = (12000-Y)*(1+0.07)^1 12750 = 1.04Y + [(12000-Y)*1.07] 12750 = 1.04Y + 12840 - 1.07Y 90 = 0.03Y Y = 3000 Amount invested in CD account = $3000

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