A pharmaceutical company has spent $50 million in R\&D expenses on a new drug. It is not clear that the drug will be profitable; therefore, the scientists have invited a company financial analyst to help determine whether to pursue this project further or no. The analyst figures that they need to spend another $25 million in manufacturing equipment, buildings, and other investments before the drug can be successfully marketed. What is the investment amount? Example 4 A gas-station owner has some extra space available on the lot. He could sell the space off for $1 million or construct a car repair garage for $750,000. What is the initial investment in the car repair garage facility? (How does the answer to Example 3 change if you are told that the $50 million spent on R\&D has created patents that could be sold for $20 million if the project is not implemented?)