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1. A pharmaceutical company acquires a company with two drugs. Drug A is a cholesterol lowering drug. By itself, Drug A is moderately effective.
1. A pharmaceutical company acquires a company with two drugs. Drug A is a cholesterol lowering drug. By itself, Drug A is moderately effective. Drug B is another moderately effective cholesterol lowering drug. When taken together, Drug A and Drug B are highly effective at lowering cholesterol levels. On a standalone basis, Drug A has a fair value of $100 million and Drug B has a fair value of $150 million. When the drugs are valued together, Drug A and Drug B have a combined fair value of $650 million. Complete the table below indicating what is the highest and best use, and the fair value of these drugs? Explain your answer below the table. Highest and Best Use Fair Value
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