drug company is deciding how much to invest in Research and Development into finding a cure stomach cancer. The table below shows the company’s demand for financial capital for R&D of this drug, based on its expected rates of return from selling the drug. Every investment has an additional 4% social return: that is, an investment that pays at least a 5% return to the drug company will create at least a 9% return for society as a whole. Estimated Rate of Return_____________________ Value of R&D Projects That Provide at Least This High a Private Rate of Return to the Drug Company (measured in millions of dollars)
A drug company is deciding how much to invest in Research and Development into finding a cure stomach cancer. The table below shows the company’s demand for financial capital for R&D of this drug, based on its expected
Estimated Rate of Return_____________________ Value of R&D Projects That Provide at Least This High a Private Rate of Return to the Drug Company (measured in millions of dollars)
10% $220
9% $228
8% $238
7% $250
6% $264
5% $280
4% $298
3% $308
If the
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$14 |
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$16 |
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$24 |
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$30 |
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