The CFO of a recently formed pharmaceutical maker named Pharmco is evaluating whether to sell or license an exciting new cancer treatment. Pharmco anticipates receiving FDA approval for its treatment in the coming weeks. Cardinal Health has offered $50 million to purchase the patent outright. Teva pharmaceuticals has offered $10 million per year for the 15 life of the patent.

1. The Company's capital structure consists of 30% long term debt with a cost of 6% and it has determined it cost of equity is 18%. What is its WACC?

2. Referring to Pharmco's facts above. Should they take the Cardinal Health or the Teva offer?

3. Referring to Pharmco's facts above. If Phamco's total cost to develop the cancer treatment was $20 million, what was their IRR?