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. I 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) QUESTION THREE Provide your answer below: the higher growth rates that the investment officer had suggested and gen- erated a new set of forecasted cash flows for the synthetic steel. Even though she is convinced that the new growth rates are likely not attainable, Mary sent her new forecasts to the investment office a little while ago. She figured, "What's the difference? I don't make the final decision anyway. 1. Identify the ethical dilemmas in the above stated situation. 2. Was it appropriate for the investment officer to request Mary to change her cash flow estimates? 3. Was it appropriate for Mary to change her cash flow estimates? 4. What would you do if you were Mary? (12+ 3+ 12+ 12 = ....../9 Marks)