Use the table below that shows the rate of return and R&D spending for a hypothetical firm.  Assume the interest-rate cost of funds is 6%. Expected rate of return (%) R&D (millions of $) 15 0 12 10 9 20 6 30 3 40 (a)Graph the marginal cost and marginal benefit curves of R&D spending in the graph below.  Be sure to label the axes.  What is the optimal level of R&D spending? (b)Now assume that the interest-rate cost of funds is 9%.  Show on the graph what happens to the interest-rate cost of funds curve.  What is the optimal level of R&D spending?

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