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The Long-Life Company has finally developed a new vaccine. The company estimates that it has a 10-year monopoly for the production of the vaccine,

 


The Long-Life Company has finally developed a new vaccine. The company estimates that it has a 10-year monopoly for the production of the vaccine, and it is trying to estimate how many vaccines it should try to sell annually. Machines to produce the new vaccine cost $70 million, have a 5-year life, straight-line depreciation, and a zero salvage value. Each machine is capable of producing 75,000 doses annually. Annual fixed costs for producing the vaccine are $50 million, and the variable costs per dose is $1000. The company's dscount rate for this type of vaccine is 15%, and it is corporate tax rate is 30%. The total market for the vaccine could be as high as 1,000,000 annually. Part A: If the annual sales are 200,000, what will be the NPV and IRR of the product over its 10-year life? C

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