When $70 is invested monthly with an annual compound interest rate of 12% interest, compounded monthly, what is the total amount of the investment at the end of the second month? Round the answer to two decimal places as needed. (1 point)

Question

The total amount of the investment at the end of the second month is $

Answer 1

To solve this problem, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:
A = final amount of investment
P = principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = time in years

In this case, the principal amount is $70, the annual interest rate is 12% or 0.12, the interest is compounded monthly (so n = 12), and the time is 2 months (so t = 2/12 = 1/6).

Plugging these values into the formula:

A = 70(1 + 0.12/12)^(12*(1/6))
A = 70(1 + 0.01)^(2)
A = 70 * 1.01 * 1.01
A = 70 * 1.0201
A = 71.407

Rounding to two decimal places, the total amount of the investment at the end of the second month is $71.41.