Question
A firm is considering its R&D spending for the next year. The following table shows the cost of borrowing for the firm (the interest rate),
A firm is considering its R&D spending for the next year. The following table shows the cost of borrowing for the firm (the interest rate), the firm's demand for financial capital if it can capture only the private benefits of investment, and the social demand for financial capital at each interest rate.Based on this information, which option completes the blanks in the following sentence?If the firm can borrow funds at an interest rate of 5%, it will choose to borrow and invest $, but if it could capture the social as well as the private benefits of its research, it would choose to borrow and invest $A. 181,236B. 126,164C. 151,197D. 105,137
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