Final answer:
HighFlyer Airlines should invest in R&D projects yielding returns of at least 6%, matching the opportunity cost of capital. The Gizmo Company's investments also include a 5% social benefit, indicating projects beneficial to society when the social return exceeds the cost of capital.
Step-by-step explanation:
The question pertains to the optimal level of investment in Research and Development (R&D) for HighFlyer Airlines, considering the opportunity cost of financial capital. If HighFlyer Airlines faces an opportunity cost of 6% for its financial capital, the firm should invest in R&D projects that are expected to yield a return of at least 6%. The firm's R&D investment decision would be based on comparing the expected rate of return from the R&D investment with the opportunity cost of capital. The firm should invest in R&D up to the point where the marginal benefit (expected return) is equal to the marginal cost (opportunity cost of capital).
Similarly, for the Gizmo Company, the incorporation of social benefits changes the analysis. Given that each investment has an additional 5% social benefit, an investment that pays at least a 6% return to the Gizmo Company effectively yields an 11% return to society. This information suggests that from a societal perspective, investing in such projects would be advantageous when the social return surpasses the opportunity cost of capital.