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Question:

An investor invests $5,500 into a mutual fund and earns 6.75% on the principal for each of three years. How much interest has accrued at the end of the period?\u00A0

A $1,113.75
Explaination

To calculate interest earned over a period of time, you would use the formula I=PRT. Interest equals principle ($5,500) times the rate of return (.0675) times the length of time (3 years): (5,500)(.0675)(3) = $1,113.75.