how do you get 15?

e) 15) You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last for 17 years. You expect that the drug will produce cash flows of $10 million its first year and that this amount will grow at a rate of 4% per year until the cash flow 17 years. Once the patent expires, other pharmaceutical companies will be able to produce generic equivalents of your drug and competition will drive my future profits to zero. If the interest rate is 12% per year, then what is the present value of producing this drug? a) $71.2 million b) $89.5 million c) $92.1 million d) $105.0 million c) $170.0 million 16) You are saving for retirement. To live comfortably, you decide you will need to save $4,000,000 in your RRSP by the time you are 65. Today is your 22nd birthday, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you will put the same amount into an RRSP account. If the interest rate is 8%, how much must you set aside each year to make sure that you will have $ 4,000,000 in the RRSP on your 65th birthday? a) $11.206.06 b) S11,237.54 c) S12,136.55 d) $33.120.61 c) 5332,136,55 17) Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an uptront cost of $200,000, or you can lease a truck from the manufacturer for five years for a monthly fease payment of $4.000 (paid at the end of each month). Your firm can borrow at 6% per year with quarterly compounding. What is the monthly discount rate that you should use to evaluate the truck lease? a) 0.48794 b) 0.4989 S0500 Dlh FE DOO 000 F4 so F3 F7 F6 F5