Lester had $6,270 in his savings account at the beginning of this year. This amount includes both the $6,000 he originally invested at the beginning of last year plus the $270 he earned in interest last year. This year, Lester earned a total of $282.15 in interest even though the interest rate on the account remained constant. This $282.15 is best described as:

A. Compound Intereest
B. Interest on Interest
C. Simple Interest
D. Discounted Interest
E. Complex Interest

A. compound interest

Explanation:

The amount of $282.15 is best described as compound interest. Compound interest is determined by multiplying the interest rate by the compound amount. The compound amount is the principal invested plus any already earned interest till date.

In compound interest arrangement, both the principal and interest earned till date will always earn interest.

So the $282.15 is called compound interest

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