Question

A person invests $5000 in treasury notes and bonds. The notes pay 8% annual interest and the bonds pay 10% annual interest. If the annual in- come is $480, how much is invested in treasury notes?

Answer 1

Investment in treasury notes is `$1000`.

Explanation:

Let the money invested in treasury notes be `$x`. Annual income on it at `8%` per annum for a year will be `8/100 xx x`.

Then money invested in bonds at `10%` would be `$(5000-x)` and annual income on it for a year will be `10/100 xx (5000-x)`.

As total yield is `480`, we have

`(8x)/100+(10(5000-x))/100=480` - multiplying both sides by `100`

or `8x+10(5000-x)=48000`

or `8x+50000-10x=48000`

or `-2x=48000-50000=-2000`

i.e. `x=-2000/-2=1000`

Hence, investment in treasury notes is `$1000`.