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 x 2
120(1+0.005)^2
120(1+0.06)+120
120(1+0.005)+120
The correct calculation is 120(1+0.005).
This is because the interest rate of 6%, compounded monthly, can be represented as a monthly interest rate of 6% divided by 12, which is 0.005.
Therefore, to find the principal amount at the beginning of the second month, you would multiply the initial investment of $120 by 1 plus the monthly interest rate of 0.005.