$5,000 is invested at 3% interest. How much money must be invested at 5% interest so that the total interest from the two investments is $275 after one year?

$2,000

$2,500

$3,000

Question

$5,000 is invested at 3% interest. How much money must be invested at 5% interest so that the total interest from the two investments is $275 after one year?

$2,000

$2,500

$3,000

ciarán95 · Answer

First of all, lets take the $5000 investment. We'll work out the interest on this first after 1 year, which is 3% of $5000...

So, 100% = $5000
This means that 1% of the investment = $5000/100
So, 3% of the investment (3 times 1%) = ($5000/100) x 3, which you can work out.

I'm not going to give you the answer to the above, but whatever it is you can subtract it from $275 to find the remaining interest needed to be earned after 1 year. 

If the answer for the 3% interest was $100 (which is not true, but I'll use it as an example), then we require a further $175 of interest on the other investment. We are told that this investment will be at 5% interest, so the interest will be 5% of the amount of money we invest into it.

So, we can work backwards this time:
5% of the investment money = $175
So, 1%  will be = $175/5
So, 100% or all the investment money (100 times 1%) = ($175/5) x 100...based on your answer for the first part, you can follow these steps to get the correct final answer. Hope that helps! :)