1. The problem: Calculate the simple interest earned on a principal of 1000 at an annual interest rate of 5% for 3 years without using a calculator. 2. Formula for simple interest: $$SI = P \times R \times T$$ where $P$ is the principal, $R$ is the rate (in decimal), and $T$ is the time in years. 3. Convert the rate to decimal: $5\% = 0.05$. 4. Calculate simple interest: $$SI = 1000 \times 0.05 \times 3 = 150$$. 5. Explanation: Simple interest is calculated only on the original principal. Here, the interest earned over 3 years is 150. 6. Final answer: The simple interest is 150. 1. The problem: Calculate the compound interest on a principal of 1000 at an annual interest rate of 5% compounded yearly for 3 years without using a calculator. 2. Formula for compound interest: $$A = P \times (1 + R)^T$$ where $A$ is the amount, $P$ is the principal, $R$ is the rate (in decimal), and $T$ is the time in years. 3. Convert the rate to decimal: $5\% = 0.05$. 4. Calculate amount: $$A = 1000 \times (1 + 0.05)^3 = 1000 \times 1.05^3$$. 5. Calculate $1.05^3$ stepwise: $$1.05 \times 1.05 = 1.1025$$ and $$1.1025 \times 1.05 = 1.157625$$. 6. Calculate amount: $$A = 1000 \times 1.157625 = 1157.625$$. 7. Calculate compound interest: $$CI = A - P = 1157.625 - 1000 = 157.625$$. 8. Explanation: Compound interest is interest on principal plus accumulated interest. Here, the interest earned over 3 years is approximately 157.63. 9. Final answer: The compound interest is 157.63.