Dr$.$ Harold Wolf of Medical Research Corporation $($MRC$)$ was thrilled with the response he had received from drug companies for his latest discovery, a unique elec$-$ tronic stimulator that reduces the pain from arthritis. The process had yet to pass rig$-$ orous Federal Drug Administration $($FDA$)$ testing and was still in the early stages of development, but the interest was intense. He received the three offers described below this paragraph. $($A $10$ percent interest rate should be used throughout this analysis unless otherwise specified.$)$ Offer I Offer II Offer III $$1,000,000$ now plus $$200,000$ from year $6$ through $15.$ Also if the product did over $$100$ million in cumulative sales by the end of year $15,$ he would receive an additional $$3,000,000.$ Dr$.$ Wolf thought there was a $70$ percent probability this would happen. Thirty percent of the buyer$$s gross profit on the product for the next four years. The buyer in this case was Zbay Pharmaceutical. Zbay$$s gross profit margin was $60$ percent. Sales in year one were projected to be $$2$ million and then expected to grow by $40$ percent per year. A trust fund would be set up for the next $8$ years. At the end of that period, Dr$.$ Wolf would receive the proceeds $($and discount them back to the present at $10$ percent$).$ The trust fund called for semiannual payments for the next $8$ years of $$200,000($a total of $$400,000$ per year$).$ The payments would start immediately. Since the payments are coming at the begin$-$ ning of each period instead of the end, this is an annuity due. To look up the future value of an annuity due in the tables, add $1$ to n $(16??1)$ and subtract $1$ from the value in the table. Assume the annual interest rate on this annuity is $10$ percent annually $(5$ percent semiannually$).$ Determine the present value of the trust fund$$s final value. Required: Find the present value of each of the three offers and indicate which one has the highest present value.