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take good b) Annuity Other Types iv You work for Goodhealth Pharmaceutical Company Limited that has developed a new anti-viral drug. The patent on

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take good b) Annuity Other Types iv You work for Goodhealth Pharmaceutical Company Limited that has developed a new anti-viral drug. The patent on the drug will last for 17 years. Your company expect that the drug will produce cash flows of Ghe10 million in its first year and that this amount will grow at a rate of 4% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce generic equivalents of your drug and competition will drive any future profits to zero. If the interest rate is 19% per year, estimate the present value of producing (5 Marks) the new anti-viral drug. You are running a delivery company in the major cities of Ghana. Analysts predict that the company's earnings will grow at 30% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 2% per year and continue at that level forever. Your company has just announced earnings of Ghc5,000,000. What is the present value of all future earnings if the interest rate is 8%? (Assume all cash flows occur at the end of the (5 Marks) year.) iiv 104(1+45. PV2 Question 3 Gancial markets. [3 marks]

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