(1) (50%) A pharmaceutical company is considering producing a generic drug. By spending 50 million today, the pharmaceutical company could begin selling its drug in one year. Assume a 10% interest rate. Suppose that the generic drug will generate prots of 8 million a year until the end of time. (a) (b) (C) (d) What is the net present value of producing the drug? Suppose that the generic drug will generate prots of 4 million a year until the end of time (in perpetuity). What is the net present value of producing the drug? Suppose that there is a 50% probability that the drug will generate prots of 8 million a year until the end of time and a 50% probability that it will generate prots of 4 million a year until the end of time. What is the expected net present value of producing the drug? Suppose that the pharmaceutical company waits one year to learn whether it will earn prots of 8 million a year or 6 million a year selling its drug. If the pharmaceutical company learns that it will earn prots of 8 million a year until the end of time, it will spend 50 million to bring the generic drug to the market. What is the net present value of bringing the generic drug to the market if the company waits one year and nds out that it will earn $8 million of prot a year