1. Why, despite not being sensitive to depreciation expenses, purchasing power and gains in replacement value, do historical costs (HC) continue to be used in the accounting procedures and in financial statements?
2. You are considering a 25-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 7.29%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.