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?
a 120(1 + 0.005)^2
b 120(1+0.06) + 120
c 120 . 2
d 120(1 + 0.005) + 120
The correct calculation to find the principal amount at the beginning of the second month would be:
d) 120(1 + 0.005) + 120
This calculation takes into account the $120 that is invested monthly and adds the interest earned on the principal amount for the first month, which is 0.005 times the principal amount. Then, the total amount invested and earned in interest for the first month is added to the second month's investment of $120.