Question

Difficulty: MediumFinancial Mathematics (Interest, Profit, Loss, and Depreciation)

A businesswoman invested ₦50,000\text{₦}50,000 in a financial fund. Part of the money was invested at a simple interest rate of 6%6\% per annum, and the remaining part was invested at 8%8\% simple interest per annum. If the total interest earned at the end of 11 year was ₦3,600\text{₦}3,600, what was the amount, in Naira, invested at the 8%8\% interest rate?

Answer: 30000 Naira

Answer

The amount invested at the 8%8\% interest rate is ₦30,000\text{₦}30,000.
Setting up the linear equation for annual simple interest gives 0.06(50,000−x)+0.08x=3,6000.06(50,000 - x) + 0.08x = 3,600. Simplifying this yields 3,000+0.02x=3,6003,000 + 0.02x = 3,600, which solves to x=30,000x = 30,000. Thus, ₦30,000\text{₦}30,000 was invested at 8%8\%.

Step-by-Step Solution

1
Define variables for the two investment amounts.
Let xx be the amount in Naira invested at 8%8\%, so (50,000−x)(50,000 - x) is the amount invested at 6%6\%.
The total capital of ₦50,000\text{₦}50,000 is split into two distinct portions.
2
Formulate the total interest expression using the simple interest formula I=P×R×T100I = \frac{P \times R \times T}{100}.
6100(50,000−x)+8100x=3,600\frac{6}{100}(50,000 - x) + \frac{8}{100}x = 3,600
The sum of annual interests from both parts equals the total interest earned of ₦3,600\text{₦}3,600.
3
Expand the terms and solve the linear equation for xx.
3,000+0.02x=3,600  ⟹  0.02x=600  ⟹  x=30,0003,000 + 0.02x = 3,600 \implies 0.02x = 600 \implies x = 30,000
Isolating xx yields the exact principal amount allocated to the 8%8\% interest rate.

Key Concept

Simple Interest and Allocation of Principal across Different Interest Rates
Estimated Time:1m 30s
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