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⋅2120 times 2120(1+0.005)2120 left parenthesis 1 plus 0.005 right parenthesis squared120(1+0.005)+120120 left parenthesis 1 plus 0.005 right parenthesis plus 120120(1+0.06)+120
The correct calculation can be found using the formula:
120(1+0.005) + 120
This formula accounts for the monthly investment of $120 plus the interest earned in the first month at an annual compound interest rate of 6%, compounded monthly.