193. On January 2, 2014, Provence Corporation wishes to issue €3,000,000 (par value) of its 8%, 10-year bonds. The bonds pay interest annually on January 1. The discount rate is 10%. Using the interest factors below, compute the amount that Provence will receive from the sale of the bonds. $\begin{array}{ll} \text { Present Value of } 1 \text { at } 8 \% \text { for } 10 \text { periods } & 0.4632 \ \text { Present Value of } 1 \text { at } 10 \% \text { for } 10 \text { periods } & 0.3855 \ \text { Present Value of an ordinary annuity at } 8 \% \text { for } 10 \text { periods } & 6.7101 \ \text { Present Value of an ordinary annuity at } 10 \% \text { for } 10 \text { periods } & 6.1446 \end{array}$

Question

Quizplus · Accepted Answer

The correct answer is A because the amount that Provence will receive from the sale of the bonds is €2,631,204. This is calculated by multiplying the par value of the bonds (€3,000,000) by the present value of an ordinary annuity at 10% for 10 periods (6.1446).

193 A) €2,631,204