Consider an asset with a current market value of $750,000 and a duration of 7 years. Assume the asset is partially funded through a zero-coupon bond with a maturity (face) value of $650,000 and has a maturity of 5 years. The current market rate is 10% and interest rates are expected to increase by 1%. Which of the following statements is true?

The current equity value of the position is $100,000 and if interest rates increase the equity value will increase

The current equity value of the position is $346,401 and if interest rates increase the equity value will decrease.

The current equity value of the position is $100,000 and if interest rates increase the equity value will decrease.

The current equity value of the position is $278,988 and if interest rates increase the equity value will increase.

The current equity value of the position is $250,000 and if interest rates increase the equity value will increase.