Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug. The total

R&D

costs are estimated to reach around $875,000,000 with clinical trials mounting to $145,000,000. The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year. The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years. A monthly prescription is anticipated to generate revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is assumed. Calculate the market share percentage in the third year. Round to the nearest percent.

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A.

11 percent

B.

7 percent

C.

25 percent

D.

4 percent