Answer:
compound interest
Explanation:
If the note carried simple interest, then Lenny should repay:
$10,000 + ($10,000 x 5 years x 10%) = $10,000 + $5,000
If the note carried compound interest, then Lenny should repay:
$10,000 x (1 + r)ⁿ = $10,000 x (1 + 10%)⁵ = $10,000 x 1.6105 = $16,105
Compound interest is interest charged over previously earned interest.
