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22 Jan 2018, 01:27
00:00

Difficulty:

45% (medium)

Question Stats:

73% (01:34) correct 27% (01:52) wrong based on 48 sessions

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How much of $5,000 savings should be invested in an account that yields 5% simple annual interest, if the rest will be invested in an account that yields 7% simple annual interest and the desired return after a year is exactly 6.5% on the entire$5,000?

A. $2,500 B.$2,250
C. $2,000 D.$1,750
E. $1,250 _________________ SVP Joined: 08 Jul 2010 Posts: 2302 Location: India GMAT: INSIGHT WE: Education (Education) Re: How much of$5,000 savings should be invested in an account that yield  [#permalink]

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22 Jan 2018, 05:10
Bunuel wrote:
How much of $5,000 savings should be invested in an account that yields 5% simple annual interest, if the rest will be invested in an account that yields 7% simple annual interest and the desired return after a year is exactly 6.5% on the entire$5,000?

A. $2,500 B.$2,250
C. $2,000 D.$1,750
E. $1,250 The question can be solved using weighted Average method or by forming a simple equation. Here is the solution that I like to share with reader Let,$x is to be invested @5%
i.e. $(5000-x) is to be invested @7% i.e. Total Interest = (5/100)*x + (7/100)*(5000-x) = (6.5/100)*5000 Solving this equation we get, 5x + 35000 - 7x = 32500 i.e. 2x = 2500 i.e. x =$1250

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Re: How much of $5,000 savings should be invested in an account that yield [#permalink] ### Show Tags 22 Jan 2018, 09:11 2 1 Bunuel wrote: How much of$5,000 savings should be invested in an account that yields 5% simple annual interest, if the rest will be invested in an account that yields 7% simple annual interest and the desired return after a year is exactly 6.5% on the entire $5,000? A.$2,500
B. $2,250 C.$2,000
D. $1,750 E.$1,250
Attachment:

Capture.PNG [ 3.73 KiB | Viewed 432 times ]

So, Amount invested at 5% Simple Interest is $$\frac{1}{4}*5000$$ = $$1250$$ , answer will be (E)

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Re: How much of $5,000 savings should be invested in an account that yield [#permalink] ### Show Tags 23 Jan 2018, 08:55 Bunuel wrote: How much of$5,000 savings should be invested in an account that yields 5% simple annual interest, if the rest will be invested in an account that yields 7% simple annual interest and the desired return after a year is exactly 6.5% on the entire $5,000? A.$2,500
B. $2,250 C.$2,000
D. $1,750 E.$1,250

We can create a weighted average equation, in which x = the amount invested at 5% and 5,000 - x = the amount invested at 7%.

0.05x + 0.07(5,000 - x) = 0.065(5000)

0.05x + 350 - 0.07x = 325

-0.02x = -25

x = 1,250

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