Computation of bond Market Price and Amortization of Premium orDiscount

Lighthouse Enterprises decided to issue $700,000 of 10 year old bonds. The interest rateon the bonds is stated at 10% payable semiannually. At the time of the bonds were sold. The market rate had increased to 12%.

Instructions

1. Determine the maximum amount an investor should pay for these bonds (Note round to the nearest dollar.)

2. Assuming that the amount in (1) is paid, compute the amount at which the amount at which the bonds would be reported by the investor after being held for one year. Use two recognized methods of handling amortization of the difference in cost and maturity value of the bonds and give support to the method you prefer. (Note: Round to the nearest dollar). Do not understand computation of bond maturity value using Present Value in excel? Please explain the reasoning how to approach this problem. Thanks