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Please answer the question step by step. Thank you! A company got approval to commercialize a new drug to treat Shingles. The following are the
Please answer the question step by step. Thank you!
A company got approval to commercialize a new drug to treat Shingles. The following are the key facts: If the drug passes stage 3 clinical trials, the likelihood it will be a commercial success is 40%. If the drug is a commercial success, the annual cash flow for the company in each of the next 20 years will be $6 million. If the drug is not a commercial success, the annual cash flow for the company in each of the next 20 years will be $1.5 million. If the stage 3 clinical trials are a success and a 10% discount rate is applied, what is the NPV of the drug at the start of the commercialization period? Express your answer to the nearest million e.g. $5.2 million should be expressed as 5Step by Step Solution
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