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CFA Question: GlaxoSmithKline Plc is examining the economic feasibility of developing a new medicine. The initial investment in Year 1 is $ 5 0 0
CFA Question: GlaxoSmithKline Plc is examining the economic feasibility of developing a new medicine. The initial investment in Year is $ million. The investment in Year is $ million. There is a percent chance that the medicine will be developed and will be successful. If that happens, GlaxoSmithKline must spend another $ million in Year but its income from the project in Year will be $ million, not including the thirdyear investment. In Years and it will earn $ million a year if the medicine is successful. At the end of Year it intends to sell all rights to the medicine for $ million. If the medicine is unsuccessful, none of GlaxoSmithKlines investments can be salvaged. Assume that the market return is percent, the riskfree rate is percent, and the beta risk of the project is All cash flows occur at the end of each year.
Calculate Net Present Value. Please solve using a Financial Calculator WITH STEPS and what buttons to input. The answer is given as $milllion however when I input using Financial Calculator I get $million which is wrong.
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