The table shows the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. In a graph for determining the optimal R&D expenditure, the interest-cost of funds curve would be a(n)
A)upsloping line within the range $35M to $75M.
B)horizontal line at 7 percent.
C)upsloping line within the range 5 to 13 percent.
D)downsloping line within the range 13 to 5 percent.

Question

The table shows the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. In a graph for determining the optimal R&D expenditure, the interest-cost of funds curve would be a(n)
A)upsloping line within the range $35M to $75M. 
B)horizontal line at 7 percent. 
C)upsloping line within the range 5 to 13 percent. 
D)downsloping line within the range 13 to 5 percent.

Quizplus · Accepted Answer

The Answer of  The table shows the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. In a graph for determining the optimal R&D expenditure, the interest-cost of funds curve would be a(n)
A)upsloping line within the range $35M to $75M. 
B)horizontal line at 7 percent. 
C)upsloping line within the range 5 to 13 percent. 
D)downsloping line within the range 13 to 5 percent.

The Table Shows the Expected Rate of Return, R&D Spending