You are Chief Engineer and Lead Decision Maker for the Biomedical Research and Development Division at Cureall. You know the following information: Interest is expected to be 20% per year unless stated otherwise Cureall's MARR is 30% Your cousin told you that sloths can hold their breath longer than dolphins can. You're not sure. 13 weeks in a quarter, 52 weeks in a year, 4 quarters in a year, 3 months per quarter Average salary cost at Cureall is $92 per hour (including benefits) Capital (lending) options: Your financial options from banks willing to speak with you and lend you money are as follows: o Giant Nationalized Bank: 10% per year, compounded quarterly o Bank of the One Percent: 12% per year, compounded monthly o Lendit & Takenrun: 10.5% per month, compounded semi-annually O Bailout Banking Corp: 5% per month, compounded quarterly Business Lines & Operating costs Cureall has three flagship development programs: Urbetteral. Suretofix, Healerex we. Operating and development costs for the Urbetterall program are projected to be 12% more than the Suretofix program 5 . Operating and development costs for Healerex are 2% less than Suretofix each year as seen for the next 8 years The following graph is provided to you on operating and development costs for Suretofix: Suretofix Operating Costs: year of 11 2 3 4 5 6 7 8 . $50 $100 M . $150 .... .. $200 $250 .. $300 .. . . $350 $400 $450 $500 Ynot Loan Offer: The capital investment company, Ynot, has offered the following to fund your projects in return for part ownership in Cureall. year in $M 0 1 2 3 4 5 6 7 8 Pricing and revenue: For an offering in year 2021 (year 1 with respect to Sales), initial pricing of Urbetterall is set at $90 per treatment with a decrease in cost of 12% per year for 7 years thereafter. Suretofix will be priced at $80 per treatment and will not be lowered for 8 years. Healerex will be $20 per treatment with an increase in price of %30 per year after the initial year. Urbetterall and Suretofix have a projection of 3.5 million treatments per year, Healerex has a target of 67 million treatments. Your Strategic Plan (Questions): 1. Determine the operating costs over the next 8 years in Present Worth for development of a. Suretofix, b. Urbetterall (i=20% C. and Healerex? Pw=? 50 150 2. Just in case you're not 100% confident in your answer to (1) above, let's say that total operating and development costs for all three programs is $1.85 B in present dollars. You borrow an equivalent of $550M from the bank in year 0. a. How much more do you need to be funded? b. Since they offered, you plan on asking Ynot for the rest. How much will you need in year 5 from Ynot, if any (use the 20% per year interest rate) according to the Ynot offer? 3. Calculate: a. revenue for Suretofix and Urbetterall (treatments per year per price) over at 20% interest to present dollars. b. We will just say that Suretofix and Urbetterall have an operating and cost of $900M and $630M, respectively. Knowing that profit is revenue operating and development cost and given your MARR, which are worth pursuin any? Why? (You don't have to do Healerex.) You are Chief Engineer and Lead Decision Maker for the Biomedical Research and Development Division at Cureall. You know the following information: Interest is expected to be 20% per year unless stated otherwise Cureall's MARR is 30% Your cousin told you that sloths can hold their breath longer than dolphins can. You're not sure. 13 weeks in a quarter, 52 weeks in a year, 4 quarters in a year, 3 months per quarter Average salary cost at Cureall is $92 per hour (including benefits) Capital (lending) options: Your financial options from banks willing to speak with you and lend you money are as follows: o Giant Nationalized Bank: 10% per year, compounded quarterly o Bank of the One Percent: 12% per year, compounded monthly o Lendit & Takenrun: 10.5% per month, compounded semi-annually O Bailout Banking Corp: 5% per month, compounded quarterly Business Lines & Operating costs Cureall has three flagship development programs: Urbetteral. Suretofix, Healerex we. Operating and development costs for the Urbetterall program are projected to be 12% more than the Suretofix program 5 . Operating and development costs for Healerex are 2% less than Suretofix each year as seen for the next 8 years The following graph is provided to you on operating and development costs for Suretofix: Suretofix Operating Costs: year of 11 2 3 4 5 6 7 8 . $50 $100 M . $150 .... .. $200 $250 .. $300 .. . . $350 $400 $450 $500 Ynot Loan Offer: The capital investment company, Ynot, has offered the following to fund your projects in return for part ownership in Cureall. year in $M 0 1 2 3 4 5 6 7 8 Pricing and revenue: For an offering in year 2021 (year 1 with respect to Sales), initial pricing of Urbetterall is set at $90 per treatment with a decrease in cost of 12% per year for 7 years thereafter. Suretofix will be priced at $80 per treatment and will not be lowered for 8 years. Healerex will be $20 per treatment with an increase in price of %30 per year after the initial year. Urbetterall and Suretofix have a projection of 3.5 million treatments per year, Healerex has a target of 67 million treatments. Your Strategic Plan (Questions): 1. Determine the operating costs over the next 8 years in Present Worth for development of a. Suretofix, b. Urbetterall (i=20% C. and Healerex? Pw=? 50 150 2. Just in case you're not 100% confident in your answer to (1) above, let's say that total operating and development costs for all three programs is $1.85 B in present dollars. You borrow an equivalent of $550M from the bank in year 0. a. How much more do you need to be funded? b. Since they offered, you plan on asking Ynot for the rest. How much will you need in year 5 from Ynot, if any (use the 20% per year interest rate) according to the Ynot offer? 3. Calculate: a. revenue for Suretofix and Urbetterall (treatments per year per price) over at 20% interest to present dollars. b. We will just say that Suretofix and Urbetterall have an operating and cost of $900M and $630M, respectively. Knowing that profit is revenue operating and development cost and given your MARR, which are worth pursuin any? Why? (You don't have to do Healerex.)