Suppose you have $5000 to invest. A certificate of deposit (CD) earns 6% annual interest, while bonds, which are more risky, earn 8% annual interest. You decide to invest $2000 in a CD and the rest in bonds. How much interest will you have earned at the end of one year?

Question

Suppose you have $5000 to invest.  A certificate of deposit (CD) earns 6% annual interest, while bonds, which are more risky, earn 8% annual interest.  You decide to invest $2000 in a CD and the rest in bonds.  How much interest will you have earned at the end of one year?

anonymous · Answer

The CD gives you back 6% of your investment. So you get 6/100*2000 = $120 from it.

The bonds return 8% of your $3000. Which gives you 8/100*3000 = $240.

Your total earnings should be $360.

anonymous · Answer

Thanks!