Starbucks is one of the biggest coffee companies in the world which was founded in 1971.  It seems there is high probability of succeeding in earning large amount of money if you buy Starbucks’ bond.  The money will mature 8 years later in 2023 and interest will grow at the rate of 3.85%/ a. compounded annually. 

 

a. What are the principal value, interest rate and compounding period?

 

b. If you have $105, 000 to invest in, what would be the future amount when it reaches maturity? 

Use TVM-Solver.  Copy the screen that showed up.

 

c. Find the future value algebraically by using Geometric Sequence and Financial Application.  State how they are related.