An amount of R&D spending that is less than the optimal amount indicates that the
A)interest-rate cost-of-funds and expected rate of return are constant.
B)interest-rate cost-of-funds is equal to the expected rate of return.
C)interest-rate cost-of-funds is less than the expected rate of return.
D)interest-rate cost-of-funds is greater than the expected rate of return.

Question

Quizplus · Accepted Answer

When the interest-rate cost-of-funds is less than the expected rate of return, it indicates that investing more in R&D could yield returns greater than the cost of borrowing or using funds for that purpose, suggesting that the current spending is less than optimal.

An Amount of R&D Spending That Is Less Than the Optimal