A total of $120 is invested monthly with an annual interest rate of 6% compounded monthly
To find the future value of the investment, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = future value of the investment
P = principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times that interest is compounded per year
t = number of years
In this case, P = $120, r = 6% = 0.06, n = 12 (compounded monthly), and t = 1 year (since the investment is made monthly).
Using these values, we can calculate the future value:
A = 120(1 + 0.06/12)^(12*1)
= 120(1 + 0.005)^12
≈ 120(1.005)^12
≈ 120(1.061678)
≈ $127.4
Therefore, the future value of the investment after one year will be approximately $127.4.