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Medical 24 Ltd (Medical 24) is a large pharmaceutical manufacturer listed on the main board of the Johannesburg Stock Exchange (JSE). The entity has a
Medical 24 Ltd ("Medical 24") is a large pharmaceutical manufacturer listed on the main board of the Johannesburg Stock Exchange ("JSE"). The entity has a 31 July financial yearend. Medical 24 's board of directors is currently considering whether it should invest in the development and manufacturing of a new medicine - Spamaleute. Spamaleute has a 64% chance of succeeding. The profits to be generated from its future sales, should Medical 24 succeed in promoting the medicine to the market, is estimated to deliver a return of 68%. Should the market be indifferent to the product, it will deliver a 43% return on the initial investment amount. The chance of this scenario occurring is 35%. There is however a chance of Spamaleute failing in the market. In such a case, the future profits will only exceed the initial investment amount by 23%. Assume these are the only possible outcomes. REQUIRED: Assist Medical 24 Ltd by determining the risk attached to investing in the development and manufacturing of Spamaleute
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