Referring to Problem 4A.9, at what price would the bond sell if U.S. savings bonds were paying 1.5% interest compounded annually? Compare your answer to that of the preceding problem.

Data from Problem 4A.9

A Florida state savings bond can be converted to $1,000 at maturity five years from purchase. If the state bonds are to be competitive with U.S. savings bonds, which pay 1% interest compounded annually, at what price will the state bonds sell, assuming they make no cash payments prior to maturity?