Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 yours. You expect that the

image text in transcribed
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 yours. You expect that the drug's profits will be $3 milion in the first year and that this amount wil grow at a rate of 0% per year for the next 17 years. Once the potent expires, other pharmaceutical companies will be able to produce the same drug and competition willkaly drive profits to zero. What is the present value of the new drug if the interest rate is 11% per year The present value of the new drug is $32508074.421 milion (Round to the decimal places)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Finance

Authors: Maurice D Levi

5th Edition

0415774594, 9780415774598

More Books

Students also viewed these Finance questions

Question

What factors are associated with treatment seeking?

Answered: 1 week ago

Question

How should Disney manage their global diversity?

Answered: 1 week ago