How much simple interest does $1,000 earn at 5% annual interest over 3 years?

Simple interest formula: I = P × r × t, where P is principal, r is rate (as decimal), t is time (in years). I = 1000 × 0.05 × 3 = $150. The simple interest formula is straightforward: just multiply principal × rate × time. Watch units: rate must be in the same time unit as time (annual rate with years, monthly rate with months). For ASVAB problems, rates are almost always annual. Compound interest is different and more complex: I = P(1 + r/n)^(nt) - P, where n is compounding periods per year. Most ASVAB interest problems use simple interest. The total amount after interest = principal + interest = $1,000 + $150 = $1,150. The same formula handles: bank interest, loan interest, bond interest. For half-year periods, just adjust t (e.g., 18 months = 1.5 years). Quick mental math: 5% per year for 3 years is approximately 15% total in simple interest; 15% of $1,000 = $150.