What is the total sales charge for a purchase of $75,000 in a mutual fund with a 5.50% front-end load?

To determine the total sales charge on a purchase of $75,000 in a mutual fund that has a front-end load of 5.50%, the calculation involves multiplying the purchase amount by the load percentage.

Specifically, the formula is:

Total Sales Charge = Purchase Amount × Front-End Load Percentage

Using the values from the question:

Total Sales Charge = $75,000 × 0.055 (which is the decimal form of 5.50%)

When you perform the calculation:

Total Sales Charge = $75,000 × 0.055 = $4,125

However, the correct understanding here hinges on recognizing that the sales charge is indeed calculated based on the front-end load applied to the full amount of the investment, leading to a common mistake in misinterpreting percentages or miscalculated figures.

In this case, the calculated sales charge amounts to $4,125, which aligns with the understanding of how front-end loads work. The initial choice listed did not correspond to this accurate calculation; the understanding of the front-end load's application must lead to the correct interpretation of total charged expense for investor guidance.