AFCT Arithmetic Reasoning Practice Test 2026 – Comprehensive Exam Prep

To determine how much interest you will earn from an investment of $1,000 at a 5% annual interest rate after one year, you use the simple interest formula:

Interest = Principal × Rate × Time.

Here, the principal is $1,000, the interest rate is 5% (or 0.05 in decimal form), and the time is 1 year.

Calculating this:

Interest = $1,000 × 0.05 × 1 = $50.

This means that at the end of one year, you will earn $50 in interest from your initial investment. The correct choice reflects this calculation accurately, confirming your understanding of how to calculate basic interest using given rates and investment amounts.