Expert: Bobby Soltani - 9/8/2005

Question
1.A $5000 investment at an annual simple interest rate of 5.2% earned as much interest after one year as another investment in an account that earned 6.5% annual simple interet. How much was invested at 6.5%?

Answer
Hi Blanca,

First let's find out how much interest was earned on the $5000.

Money invested x rate = interest
$5000*0.052 = $260

So, for the problem, we know the rate(6.5%) and the interest earned ($260), and we want to find the amount invested

Money invested x rate = interest
divide both sides by the rate
Money invested = interest earned / rate
Money invested = 260 / 0.065
Money invested = $4000

This is what we would expect.  It requires less money to get the same interest when you invest it at a higher rate of return.

Let me know if you have any questions.

Bobby