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

If the interest-rate cost-of-funds is less than the expected rate of return, it suggests that there are profitable opportunities for R&D investment that are not being fully exploited, indicating underinvestment.

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