Section: Mathematical Reasoning

5) An investor invests $2,500 into a mutual fund and earns 5.75% on the principle for each of three years. How much interest has accrued at the end of the period? 

1. $413.25
2. $4,132.50
3. $431.25
4. $571.00

To determine the answer, you would use this formula for calculating interest over a period of time.

I=PRT

Or:

Interest equals principle ($2,500) times rate of return (.0575) times length of time (3 years).

Answer 3 is the only one that meets the criteria.