Question

A total of $120 is invested monthly with an annual compound interest rate of 6%, compounded monthly. Which of the following calculations explains how you can find the principal amount at the beginning of the second month?(1 point)

120 ( 1 + 0.006 ) + 120
120 ( 1 + 0.06 ) + 120
120 ( 1 + 0.005 )^2
120 x 2

Answer 1

The correct calculation to find the principal amount at the beginning of the second month is:

120 ( 1 + 0.006 ) + 120