The drug company Pfizer is considering whether to invest in the developing of a new cancer drug. Development will require an initial investment of $10 million now; beginning one year from now, the drug will generate annual profits of $4 million for three years. What is the present discounted value of the drug? Assume the interest rate is i%.
The drug company Pfizer is considering whether to invest in the developing of a new cancer drug. Development will require an initial investment of $10 million now; beginning one year from now, the drug will generate annual profits of $4 million for three years. What is the present discounted value of the drug? Assume the interest rate is i%.
Chapter16: The Markets For Labor, Capital, And Land
Section: Chapter Questions
Problem 12P
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The drug company Pfizer is considering whether to invest in the developing of a new cancer drug. Development will require an initial investment of $10 million now; beginning one year from now, the drug will generate annual profits of $4 million for three years. What is the present discounted value of the drug? Assume the interest rate is i%.
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