Test Index

Time Value of Money

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Question : 74 of 99

Marks: +1, -0

A trust fund has invested Rs. 30.000 in two different types of bonds which pays

5 \%

7 \%

interest respectively. Determine how much amount is invested in 2 nd type of bond if trust obtains an annual total interest of Rs. 1600 .

Rs.5000
Rs.6000
Rs.7000
Rs. 8000

Solution:

Concept:

Use simple linear equations based on total investment and total interest.

Explanation:

Let the amount in the

5\%

bond be

x

and in the

7\%

bond be

y

.

Total investment:

x + y = 30000

.

Total interest:

0.05x + 0.07y = 1600

.

From the first equation,

x = 30000 - y

.

Substitute into the second:

0.05(30000 - y) + 0.07y = 1600

.

Simplify:

1500 - 0.05y + 0.07y = 1600

.

0.02y = 100

.

y = \frac{100}{0.02} = 5000

.

Thus, the amount in the

7\%

bond (second type) is Rs. 5000.

Answer:

Rs. 5000

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