Investment word problem

[gm909]

This word problem has been a challange... Can you please help I dont even know where to start anymore...

A financial counselor recommends investing twice as much in CDs as in a bond fund. A client follow his advice and invests $21,000 in CDs paying 1% more interest than the fund. The CDs would generate $840 more interest than the fund. Find the two rates.

 

[stapel]

A financial counselor recommends investing twice as much in CDs as in a bond fund. A client follow his advice and invests $21,000 in CDs paying 1% more interest than the fund. The CDs would generate $840 more interest than the fund. Find the two rates.

You are given the amount invested in CDs, and told that this is twice what was invested in the bond fund. So how much was invested in the bond fund?

The interest rate on the CDs is defined in terms of the rate on the bond fund, so pick a variable for the bond fund's rate, and then create an expression, in terms of this variable, for the rate on the CDs.

Create the two "interest income" expressions, probably using the "simple interest" equation "I = Prt".

You are given that the CDs' interest income will be $840 more than the bond fund's income. So translate this relationship into an equation, and solve the linear equation for the value of the variable.

Then back-solve for the two interest-rate values.

If you get stuck, please reply showing all of your steps. Thank you!

 

[Denis]

An example: if the CDs generated $630 more interest, then:
21000 * .05 = 1050
10500 * .04 = 420
1050 - 420 = 630
Rates would be 5% and 4%.

 

[gm909]

thanks I got my answers 6% and 7%