Athos Industries is considering a new capital budgeting project that will last for three years and requires investment of 90000 now. Athos plans on using a discount rate of 73% pa. to evaluate this project. Based on extensive research, it has prepared the following incremental cash flow projections: 0 1 2 3 Sales (Revenues in ) 100.000 100.000 100,000 Cost of Goods Sold (60% of 60,000 60.000 60.000 Sales) Depreciation 30,000 30,000 30,000 EBIT 10,000 10,000 10,000 Taxes (20%) 3,000 3,000 3.000 Unlevered Net Income 7,000 7000 7.000 Additional working capital of 5000 is required in each of years 1 and 2 and a reduction of 10000 is expected in yew 3. The canh flows occur at the end of the year. Athos would like to know how sensitive the project's NPV is to changes in the discount rate How much on the discount este vwy before the NPV reaches zerot Express as a percentage and correct to 1 decimal place Aruwer You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 10 years. You expect that the drug's profits will be 5.9 million at the end of its first year and that this amount will grow at a rate of 6% per year for the next 10 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will mean profits will then decline after year 11, at a rate of 16% per year forever, a. What is the present value in millions of the cash flows from the new drug if the interest rate is its per year? b. What is the maximum the company should be willing to invest in millions in this project to break even in NPV? CoVidVax is a biotechnology firm that is about to announce the results of its clinical trials of a potential new vaccine. If the trials are successful, Co VidVax stock will be worth 84.7 per share. However, if the trials are not successful, then Covid Vax stock will only be worth 12.6 per share. of it on the moming that the announcement is scheduled Covid Vax stock is trading at 76, then compute the implied probability that investors must be placing on the trials being successful stion Answer Next page vious page York Bikes has come up with a new mountain bike prototype and wishes to commence pilot production and test marketing. The pilot production and test marketing phase will last for one year and cost 708701 now. Your management team believes that there is a 42% chance that the test marketing phase will be successful and that there will be sufficient demand for the new mountain bike. w the rest marketing phase is successful, then the firm can rest 3500000 in year one to build a plant that will generate expected annat atter-tax cash flows of f415279 in perpetuty beginning in year two It the test marketing phase is not successful then the firm can still go ahead and build the new plant, but the expected annual after-tax cash flow would be only 30000.0 Derpetuty beginning in year two The firm has the option to sell the prototype mountain bike to a foreign competitor next year, for 400040. The firm's cost of capital is 79. per annum. Compute the NPV of the project Arvower