Isaac just inherited 46400. He chooses to invest some of his...

Isaac just inherited $46400. He chooses to invest some of his inheritance in a mutual fund that pays 7% and the rest in a less risky CD that pays 2%. If his annual interest between the two accounts is $1563, how much did he invest in each account? Amount invested in mutual fund paying 7% interest = $ Amount invested in CD paying 2% interest = $

Transcript

00:01 So in this problem, we're told that isaac is going to inherit $46 ,400, and he's going to put into two different accounts.

00:07 One, he's going to put into a mutual fund that gets 7 % interest, and the other into a cd that gets 2 % interest.

00:13 Now, we're told after one year, the two accounts together will earn $1 ,563 in interest.

00:20 We want to figure out how much he invested into both.

00:23 So i'm going to let m represent the amount he invested in the mutual fund, and i'm going to do.

00:30 Let c represent the amount that he invested into the cd.

00:35 Well, we're told the total amount that he invested, m of it went into the mutual fund, and c of it went into the cd.

00:42 So we'd have the equation m plus c equals the investment for the $6 ,400.

00:48 Now, our second equation is going to be based on interest.

00:51 Now, in this case, we're talking about simple interest.

00:53 To find simple interest, we take p, which is the amount invested, multiply it by the rate, and it multiply it by the time.

01:00 But in this particular case, because the time is just one year, we don't have to worry about t.

01:04 It's just p times r.

01:05 So let's start by thinking about the amount of interest he'd earn for the mutual fund.

01:09 Well, his principle would be m and would multiply it by the rate.

01:13 Well, it's earning 7%.

01:15 So we'd multiply it by the percent as a decimal.

01:17 So we moved a decimal point two places to the left.

01:20 So that would be 0 .07m represents the total amount of interest he'll earn for the mutual fund.

01:27 Now, let's talk about the cd.

01:29 When we invested c dollars, so that's our principle, and the rate was 2%.

01:33 So if we turned that to a decimal, that would be 0 .02.

01:36 So 0 .02c represents all the interest he'll earn for the cd.

01:41 So when we add these two together, that should give us the total interest that he earned, which was $1 ,563.

01:48 Perfect...

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