The corporate decision on type and level of R&D activity is difficult because
A)the interest-rate cost of funds is difficult to estimate.
B)much of corporate R&D is based on the pursuit of science, not on the profit motive.
C)expected returns lie in the future and are highly uncertain.
D)total returns and marginal returns greatly diverge.

Question

Quizplus · Accepted Answer

The difficulty in corporate decision-making regarding R&D activity primarily stems from the fact that expected returns from such investments are future-oriented and come with a high degree of uncertainty. This makes it challenging to predict the outcomes and benefits of R&D investments accurately.

The Corporate Decision on Type and Level of R&D Activity