Final answer:
The total future amount after three years with a simple annual interest rate of 5 percent on an investment of Rs. 1,000 is Rs. 1,150. With a compound annual interest rate of 5 percent, the amount would be Rs. 1,157.63.
Step-by-step explanation:
When someone invests Rs. 1,000 with a simple annual interest rate of 5 percent over three years, the total accumulated amount can be calculated by adding the principal amount (the initial investment) to the interest earned over the period. The total future amount with simple interest is calculated as follows:
Total future amount (with simple interest) = Principal + (Principal × interest rate × time)
For Rs. 1,000 at 5% for three years, it would be:
Total future amount (with simple interest) = Rs. 1,000 + (Rs. 1,000 × 0.05 × 3) = Rs. 1,150
When it comes to compound interest, the interest earned each period is added to the principal before calculating the interest for the next period. After three years, the total accumulated amount using compound interest would be Rs. 1,157.63, assuming it is compounded annually. Therefore, the total compound interest earned would be Rs. 157.63.