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QUESTION THREE Simplified Systems has an outstanding issue of $1000-par-value bonds with a 12% coupon interest rate. The issue pays interest annually and has 16 years remaining to its maturity date. 1. If bonds of similar risk are currently earning a 10% rate of return, how much should the Simplified Systems bond sell for today? 2. Describe the two possible reasons why similar-risk bonds are currently earning a return below the coupon interest rate on the Simplified Systems bond. 3. If the required return were at 12% instead of 10%, what would be the current value of Simplified Systems bond? Contrast this finding with your findings in part a and discuss. (Please refer to Appendix 2 for Bonds valuation formulas) (3 + 12 + 14 = 19 marks)