2. Fast forward 7 years pretend your company did invest in R&D for an IP and repaid the amount early and decided the product has done so well they would reinvest in another aspect of it. If the company issued a five-year, $500,000 bond with a that will pay 3% interest rate to further invest in this research and development (R&D), what is their expected rate of return at the end of first year if you assume a market rate of 5%? Ensure you do the following: (R&D research and Development)

1. Find the PV (present Value)

2. Find the PV of the interest rate

3. Find the Bond Price R&D Research & Development

3. What if the interest rates rose in year 2 to 4% what would be the return in that year?

4. Make a statement about the risk factors of what year 2 means for bond repayment.