Question
Refer to the Big Pharma worksheet in the Quiz 12 spreadsheet file. What is the risk that the cumulative value after year 1will not be
Refer to the Big Pharma worksheet in the Quiz 12 spreadsheet file. What is the risk that the cumulative value after year 1will not be positive?? [Choose the nearest answer]
Select one:
a. 40%
b. 57%
c. 24%
d. 4%
Refer to the Big Pharma worksheet in the Quiz 12 spreadsheet file. What are the chances that the product will show a cumulative net profit in the fourth year? [Choose the nearest answer]
Select one:
a. 25%
b. 18%
c. 100%
d. 32%
Refer to the Big Pharma worksheet in the Quiz 12 spreadsheet file. What is the standard deviation obtained from the simulation results of the net present value? [Choose the nearest answer]
Select one:
a. $500 million
b. $790 million
c. $3 billion
d. $1.7 billion
Refer to the Big Pharma worksheet in the Quiz 12 spreadsheet file. What is the likelihood that the NPV will be greater than $5 billion? [Choose the nearest answer]
Select one:
a. 50%
b. 65%
c. 80%
d. 95%
| Big Pharma | |||||||||||||
| Suppose that the project manager of Big Pharma has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows: Market size: normal with mean of 20,000,000 units and standard deviation of 4,000,000 units. R&D costs: uniform between $600,000,000 and $800,000,000. Clinical trial costs: lognormal with mean of $150,000,000 and standard deviation $30,000,000. Annual market growth factor: triangular with minimum = 2%, maximum = 6%, and most likely = 3%. Annual market share growth rate: triangular with minimum = 15%, maximum = 25%, and most likely = 20%. The number of trials per simulation is equal to 10,000 | |||||||||||||
| Data | |||||||||||||
| Market size | 20,000,000 | ||||||||||||
| Unit (monthly Rx) revenue | $ 120.00 | ||||||||||||
| Unit (monthly Rx) cost | $ 50.00 | ||||||||||||
| Discount rate | 7% | ||||||||||||
| Project Costs | |||||||||||||
| R&D | $ 750,000,000 | ||||||||||||
| Clinical Trials | $ 100,000,000 | ||||||||||||
| Total Project Costs | $ 850,000,000 | ||||||||||||
| Model | |||||||||||||
| Year | 1 | 2 | 3 | 4 | 5 | ||||||||
| Market growth factor | 4.00% | 4.00% | 4.00% | 4.00% | |||||||||
| Market size | 20,000,000 | 20,800,000 | 21,632,000 | 22,497,280 | 23,397,171 | ||||||||
| Market share growth rate | 18.00% | 18.00% | 18.00% | 18.00% | |||||||||
| Market share | 8.00% | 9.44% | 11.14% | 13.14% | 15.51% | ||||||||
| Sales | 1,600,000 | 1,963,520 | 2,409,632 | 2,957,100 | 3,628,953 | ||||||||
| Annual Revenue | $ 2,304,000,000 | $ 2,827,468,800 | $ 3,469,869,711 | $ 4,258,224,110 | $ 5,225,692,628 | ||||||||
| Annual Costs | $ 960,000,000 | $ 1,178,112,000 | $ 1,445,779,046 | $ 1,774,260,046 | $ 2,177,371,928 | ||||||||
| Profit | $ 1,344,000,000 | $ 1,649,356,800 | $ 2,024,090,665 | $ 2,483,964,064 | $ 3,048,320,699 | ||||||||
| Cumulative Net Profit | $ 494,000,000 | $ 2,143,356,800 | $ 4,167,447,465 | $ 6,651,411,529 | $ 9,699,732,228 | ||||||||
| Net Present Value | $ 7,567,362,605 | ||||||||||||
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The FinTech Book The Financial Technology Handbook For Investors Entrepreneurs And Visionaries
Authors: Susanne Chishti, Janos Barberis
1st Edition
111921887X, 9781119218876
