As it relates to the R&D decision, the interest-rate cost-of-funds curve
A) usually slopes downward.
B) is the marginal cost element in the MB = MC decision framework.
C) indicates a constant rate of return, r.
D) reflects the interest rate on bank loans but not the implicit interest rate on the use of retained earnings.

Question

Quizplus · Accepted Answer

The interest-rate cost-of-funds curve represents the marginal cost of funds, which is a key component in the decision-making framework where marginal benefits (MB) are equated to marginal costs (MC) for optimal R&D investment decisions.

As It Relates to the R&D Decision, the Interest-Rate Cost-Of-Funds