Stepping in to our time machine, lets look back and imagine a possible investment decision a firm needed to analyze at the onset of Covid19. Please use a decision tree/real option framework to analyze if our firm (Duggan Research) should have invested $250 million a year in research and development in the search for a solution. Assumptions: - a solution will be found by someone in exactly two years time (at t=2) - there will only be one successful product approved (it will be winner takes all in that the successful firm will get a monopoly of this market) - the worlds population is 8 billion people and everyone will be needing a vaccination - the expected profit for each vaccination will be regulated (capped) at $10/person - 100 firms begin working for a solution today and each has an equal probability of being successful - each firm will only be working on one potential drug (i.e., no synergies inside a firm by working on more than one drug) - each firm will be investing $250 million for each of the next two years (no firm will abandon the project during the period) - a risk adjusted WACC of 30 percent is applicable for all of these firms Should our firm decide to work for a solution to the Covid19? Knowing what has transpired over the past few years, please discuss any relevant adjustments we should consider for any potentially similar projects in the future.