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Sweet Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development, Sweet will receive a payment of $7,900,000 if the drug

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Sweet Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development, Sweet will receive a payment of $7,900,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Sweet determines it is 70% likely that the drug will gain approval and a 30% chance of denial. (a) Determine the transaction price of the arrangement for Sweet Biotech. Transaction price

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