Freemark Abbey Winery Case

1013 Words Aug 26th, 2013 5 Pages
Baur Bektemirov

BUSF 36106: Assignment 5

Freemark Abbey Winery
Assume that under no unusual circumstances (no storm), Jaeger sells 1,000 cases of Riesling. Consider different cases: 1. Jaeger harvests grapes in anticipations of storm. Then the total revenue will be equal to 12×1000×$2.85 = $34200. 2. Jaeger doesn’t harvest and there is no storm with 50% chance. 2.1. With 40% chance, sugar concentration is 25%, then the total revenue is 12 × 1000 × $3.50 = $42000 2.2. With 40% chance, sugar concentration is 20%, then the total revenue is 12 × 1000 × $3.00 = $36000 2.3. With 20% chance, sugar concentration is below 20%, then the total revenue is 12 × 1000 × $2.50 = $30000 3. There is storm with 50% chance 3.1. Storm causes botrytis
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MicroPharma will receive 75% of sales in the U.S. and only 10% from sales overseas. v. A firm receives profit for the 10 years after if launches its product in 2003, starting from year 2004. During first years, the sales are increasing in an arithmetic progression starting from 0 in 2003 and reaching the peak in 2008. Since all numbers are in constant dollars, the total sales equal to the sum of sales in each year. If MegaPharma decides not to buy rights or license from MicroPharma, there is 50% chance of successful Phase 2 and 80% chance of successful Phase 3 (conditional on success of Phase 2), and 100% of success in FDA Review. Thus, MegaPharma has 40% chances that the the compound will be approved. If it passes Phase 2, Phase 3, and Review, MegaPharma will spend $52 million. Total MegaPharma’s anticipated sales of the compound are equal to 100 + 200 + 300 + 400 + 500 + 500 + 500 + 500 + 500 + 500 = 4000 million, total revenue is 75% × 4000 = 3000 million, if MegaPharma is the only supplier. If both MegaPharma and MicroPharma are on the market, the anticipated revenue is only a half: $1500 million. Total MicroPharma’s anticipated sales in the US are equal to $3660 million, and the revenue is $2745 million; anticipated sales overseas are equal to $3660 million and the revenue is $366 million, thus, 3111, if MicroPharma is the monopoly and 3111/2 if it has to share the market with

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