a) G, a biotechnology firm, has recently reinvested all of its earnings into R&D. The market expect G to generate net zero annual cashflows for the next 5 years. Then in the 6th year, the company is expected to generate a net cashflow of $100 million. From then on, the company is expected to generate the same cashflow for every year, until infinity(!). If the required rate of return of the market is assumed constant at 13%, what would be the current value of G (assuming all cashflows occur by the end of the year)?

b) the company announces that it has discovered a new drug. The investment spent initially for R&D is $40million. Another $10million will be spent right now for further development of the drug. Then starting from the nexr year, the drug is expected to generate an annual net cashflow of $30million for new drug for the next 10 years. Required rate pf return is still 13%. Does this look to you that announcement of this new drug is going to drive the company's value to the moon, to the ground, or going nowhere?