1. Assume the General Fund has two outstanding investments as of its 6/30/X5 year end, as follows:

• $100,000 Certificate of Deposit, 6 month original maturity, 3% annual interest rate, purchased 4/30/X5
• $500,000 Commercial Paper, 8 month original maturity, 3% annual interest rate, purchased 1/31/X5

The interest revenue that would be recorded in the GAAP-based external financial statements for the General Fund under the fair value method as of 6/30/X5 assuming a 3% interest rate still applies to such investments would be

1. $500.
2. $6,250.
3. $6,750.
4. $11,500.

Please explain your answer. Show solutions please.