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

Multiple Choice

The table shows the rate of return and R&D spending for a hypothetical firm. Assume the interest-rate cost of funds rises from 9 percent to 21 percent. What will happen to the optimal amount of R&D spending?

A) It decreases from $36 billion to $18 billion.
B) It increases from $36 billion to $48 billion.
C) It increases from $24 billion to $42 billion.
D) It decreases from $42 billion to $18 billion.