How much were the bonds worth in 2007

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John Cleaver's grandfather died in 2007 and left him a trunk that had been locked in his attic for years. At the bottom of the trunk John found a packet of 50 World War I "liberty bonds that had never been cashed in. The bonds were purcahsed for $11.50 each in 1918 and pay 3% interest as long as they are held.

a. How much were the bonds worth in 2007?

b. How much would they have been worth if they paid interest at a rate more like that paid during the 1970s and 80's, say 7%?

c. Comment on the difference between the answers to parts (a) and (b)

 

Reference no: EM13302516

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