(A)

The face value for a zero coupon bond is $100,000, and the zero matures in 17 years. Suppose that the appropriate discount rate is 1% per year with annual compounding. What is the present value of the bonds face value? Equivalently, what price are we willing to pay for this bond?

(B)

Your company is considering investing in Project X. Your analysts estimate that this project will increase your companys net cash flows by $83,068 in year 1, $166,770 in year 2, and $162,789 in year 3. For convenience, they treat these cash flows as occurring at the end of the respective years. Your analysts decided that the appropriate discount rate for this project is 3% per year, compounded annually. What is the present value of the cash flows expected from Project X?