Correlation is a measure of the strength of the relationship between two variables. It is used to predict the value of one variable given the value of the other.
Causation is the act of causing one variable to happen due to the other variable's effect.
In the problem, the money spent on R & D and the firm's annual profits are the two variables.
If the money spent on R & D is more, then the firm's annual profit is also more. So, there exists a causal factor between the two.
Therefore, both correlation and causation exists.
Correct Answer is : There is both correlation and causation.