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
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.