Question
PharmaPlus is considering developing a new drug. The R&D cost is projected to be $2 million, and the drug is expected to generate annual cash
PharmaPlus is considering developing a new drug. The R&D cost is projected to be $2 million, and the drug is expected to generate annual cash flows of $450,000 for 10 years. The company’s discount rate is 10%.
Requirements:
- Calculate the NPV of the new drug project.
- Determine the IRR.
- Compute the payback period.
- Assess the profitability index (PI).
- Should PharmaPlus proceed with the drug development?
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Contemporary Engineering Economics
Authors: Chan S. Park
5th edition
136118488, 978-8120342095, 8120342097, 978-0136118480
