2. A pharmaceutical company wants to develop a new treatment for baldness. There is an anticipated total market of 6 million bald men for this product. You know 2 million of them (the very anxious bald) rush to buy the product immediately and are prepared to pay a price of $20 per bottle for the treatment. You have also determined that some 3 million of the bald (those who are not so desperate) can be persuaded to buy the treatment at a reduced price of $15 per bottle a year after the product is launched. Finally, the last 1 million of the bald men, who really do not mind being bald, can be enticed to buy the treatment at a price of $2 per bottle two years after the product is introduced. Assume that is when your sales end. The pharmaceutical company tells you that the total cost of developing and marketing this drug is $83 million. (This cost is incurred immediately once the company decides to develop the product.) [Note: Assume one bottle of treatment is all that it takes to cure baldness.] a) What would you advise the company to do if the discount rate was 5%? b) What would you advise the company to do if the discount rate was 10%? c) Is the Internal Rate of Return (IRR) a better way of analyzing this problem? Describe how you would go about solving for the IRR (but you are not expected to calculate the value)