On January 1, 2019, Mulally Inc. purchased bonds with a face amount of $1 million and a coupon interest rate of 8%. The bonds mature in 10 years and pay interest annually on December 31 of each year. The market rate of interest on January 1, 2019 for bonds of this type was 6%. Mulally closes its books on December 31 and the bonds are considered Available for Sale. Ignore taxes.

1. At what price were the bonds issued? You should calculate this using either the Price or Net Present Value function in Excel.

2. Using the effective interest method, prepare in Excel an amortization schedule showing interest income, amortization, and bond carrying value for the life of the bond.