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 principle amount at the beginning of the second month

Answer 1

To find the principal amount at the beginning of the second month, you can use the following calculation:

1. Calculate the interest earned in the first month:
- The monthly interest rate is 6% divided by 12, which is 0.5% or 0.005.
- The interest earned in the first month is $120 multiplied by 0.005, which is $0.60.

2. Subtract the interest earned in the first month from the total invested amount of $120:
- $120 - $0.60 = $119.40

Therefore, the principal amount at the beginning of the second month is $119.40.