You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $2 million in its first year and that this amount will grow at a rate of 2% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 10% per year?
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- You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $2 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 10% per year? The present value of the new drug is $______ million.You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 19 years. You expect that the drug's profits will be $4 million in its first year and that this amount will grow at a rate of 3 * 0/o per year for the next 19 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 12% per year? The present value of the new drug is $ (enter your response here) million.You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $4 million in its first year and that this amount will grow at a rate of 3% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 8% per year? The present value of the new drug is $nothing million. (Round to three decimal places.)
- You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17years. You expect that the drug's profits will be $2 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 10% per year? The present value is?Suppose you work for a software company that has developed a new product. The patent on this product will last for seventeen years. You expect that the product will produce cash-flows of $10,000,000 in its 1st year and that this amount will grow at a rate of 4 percent per year for the next seventeen years. Once the patent expires, your competitors will be able to produce equivalents copies of your software and drive any future profits to zero. If the interest rate is 11 percent per year, then what is the present value of producing this software?You are the CFO of a drug company, and you must decide whether to invest 30 million dollars in R&D for a new drug. If you conduct the R&D, you believe that there is a 10% chance that the research will produce a useful drug. If the research is successful, investment in the drug will require an outlay of 1.2 billion dollars. The drug will likely generate annual profits of $200 million (starting a year after the outlay of 1.2 billion dollars) for 10 years until the patent expires. After that, it will generate a cash flow in perpetuity equal to $15 million. The discount rate is 6%. If you invest in R&D, you estimate that it will take 5 years to know whether the drug is successful or not. What is the NPV of the R&D investment?
- you work for a pharmaceutical comapny that developed a new drug. The patent on the drug will last 17 years . You expect the profits to be 1 million in its first year and that the amount will grow 2% for the next 17 years. the present value is if the interest rate is 11%you work dor a pharmaceutical company that has developed a new drug. the patent on the drug will last 20 years. you expect that the drug's profits will be $5 million in its first year and that this amount will grow by 2% per year for the next 20 years. once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits ti zero. what is the oresent value if the new drug if the interest rate is 10% per year?In your company-owned business, you are contemplating to purchase a new machine for $100,000 that will produce a net revenue , after deducting operating expenses, of $10,000 per year. If you are planning to keep the machine running for 4 years, what must the market or resale value be at the end of 4 years to justify the investment? It is a must that you make a 15% annual return on your investment.
- A corporation is trying to decide whether to buy the patent for a productdesigned by another company. The decision to buy will require an investment of $8 million, and the demand for the product is not known. If demand is light, the company expects a return of $1.3 million each year for three years. If the demand is moderate, the return will be $2.5 million each year for four years, and high demand will mean a return of $4 million each year for four years. It is estimated that the probability of high demand is 0.4 and the probability of a light demand is 0.2. The firm's interest rate (risk-free) is 12%. Calculate the expected present worth of the investment. On this basis, should the company make the investment? (All figures represent after-tax values.)You are considering investing in a glove manufacturing plant for which you need to immediately pay RM10 million. You expect to produce and sell 10,000 gloves per year. Production commences after 12 months, i.e, at the end of year 1 (which is also the begining of Year 2). You expect production cost to be RM50 per glove. Selling price is estimated at RM100 per glove for the first three years of sales. You are not sure about the sales price after Year 3 because your exclusive patent right expired then. The plant facilities last for 8 years. Cost of capital is 8%. Compute the glove's sales price after Year 3. and this project's NPV Don't you think the price after year 3 is the same as the marginal cost, since at optimum level of output, marginal revenue=marginal cost?Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $490,000 per year. You believe the technology used in the machine has a 10-year life; in other words, no matter when you purchase the machine, it will be obsolete 10 years from today. The machine is currently priced at $2.87 million. The cost of the machine will decline by $319,000 per year until it reaches $1.275 million, where it will remain. If your required return is 8 percent, should you purchase the machine? If so, when should you purchase it?