The Table Shows the Rate of Return and R&D Spending

question 150

Multiple Choice

The table shows the rate of return and R&D spending for a hypothetical firm. Assume the interest-rate cost of funds is 9 percent. What will be the marginal cost and the marginal benefit of the optimal amount of R&D spending?

• A)MC = 5 percent; MB = 9 percent
• B)MC = 9 percent; MB = 9 percent
• C)MC = 9 percent; MB = 13 percent
• D)MC = 5 percent; MB = 5 percent

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Definitions:

Purchased Units

The quantity of goods acquired by a company for resale or use in production during a specific accounting period.

Periodic FIFO

A method in inventory valuation where goods are assumed to be sold in the order they were acquired, calculated periodically.

Inventory Activity

This involves all movements or transactions related to inventory, including purchases, sales, returns, and write-offs, which affect the stock levels.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, used to calculate cost of goods sold.