You work for a pharmaceutical company that has developed a new drug. The patent on the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 16 years. You expect that the drug's profits will be $5 million in its first year and that this amount will grow at a rate of 3% per year for the next 16 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 11% per year? The present value of the new drug is $ 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 16 years. You expect that the drug's profits will be $5 million in its first year and that this amount will grow at a rate of 3% per year for the next 16 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 11% per year? The present value of the new drug is $ million. (Round to three decimal places.)
Expert Answer:
Answer rating: 100% (QA)
To find the present value of the new drugs profits ... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
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 drugs profits will be $2 million in its first year and that this...
-
You plan to deposit $200 in a bank account now and $600 at the end of one year. If the account earns 3% interest per year, what will the balance be in the account right after you make the second...
-
In Exercises 7683, use a graphing utility to graph the function. Use the graph to determine whether the function has an inverse that is a function (that is, whether the function is one-to-one). f(x)...
-
Consider the following independent situations for Kwok Corporation. Kwok applies ASPE. Situation 1: Kwok purchased equipment in 2010 for $120,000 and estimated a $12,000 residual value at the end of...
-
A comparative income statement is given below for McKenzie Sales, Ltd., of Toronto: Members of the companys board of directors are surprised to see that net income increased by only $38,000 when...
-
The dynamic viscosity of lubricating oil used between shaft and sleeve is 12 poise. The diameter of the shaft, which rotates at \(240 \mathrm{rpm}\), is 0.5 \(\mathrm{m}\). The sleeve length is \(120...
-
Carnival Corporation & plc is one of the largest cruise companies in the world with such well-known brands as Carnival Cruise Lines, Holland America Line, and Princess Cruises. Classify each of the...
-
Required information [The following information applies to the questions displayed below.] Income statements for the current year and one year ago, follow. Assume that all sales are on credit. For...
-
Consider the data below that shows the forecast for the number of cars sold by an electric car maker for each quarter for the next 5 years. The table below also shows the parameters for the...
-
Why has there been a trend toward more team, network, virtual, and learning organizations? Is this a fad, or will it last? In order for this new trend to work and from a strategic point of view, does...
-
Calculate the Net Present Value and the Profitability Index for the following cash flows assuming Saif Company's cost of capital is 8%. Is the project acceptable? Cash Flow (Dollars) End of Year 0 1...
-
Describe the stages in the Financial Planning Process and discuss the advantages of a process driven approach to investment decision making (7 marks) I a. Discuss the theory of Efficient Markets with...
-
Marvin received all of Epic Corporation's stock worth $180,000 in exchange for his property worth $100,000 and his professional accounting services valued at $80,000. How much income, if any, does...
-
The beta coefficient for Stock C is bc=0.4, whereas that for Stock D is bd= -0.5. a. if the risk-free rate is 9% and the expected rate of return on an average stock is 13%, b. what are required rates...
-
Neffer Services Inc. leases access to high-speed computers to small businesses. It provides the following information for the year: Budgeted Actual Overhead cost $2,000,000 $1,900,000 Computer hours...
-
State that if they are True or False And reflexive, symmetric, asymmetric, and transitive. x2-9 The function glx) has domain (-00, 3)U(3, + 00) Then, its range is all the roal numbers R %3D x-3...
-
Chapter 9 Stock Valuation at Ragan Engines Input area: Shares owned by each sibling Ragan EPS Dividend to each sibling Ragan ROE Ragan required return Blue Ribband Motors Corp. Bon Voyage Marine,...
-
Your grandmother has been putting $1000 into a savings account on every birthday since your first (that is, when you turned one). The account pays an interest rate of 3%. How much money will be in...
-
You have a $100,000 portfolio made up of 15 stocks. You trade each stock five times this year and each time you trade, you pay about $30 in commissions and spread. You have no special knowledge, so...
-
Assuming that KMSs market share will increase by 0.25% per year (implying that the investment, financing, and depreciation will be adjusted as described in Problems 13 and 14), and that the working...
-
Explain why the business objectives of owners and managers are likely to diverge. How might owners attempt to ensure that managers act in their interests and not in the managers own interests?
-
1. In what ways did the defence industries respond to the ending of the Cold War? 2. Using an Internet search, find out how the defence and security industries have responded to the threat of...
-
What is the Standard Industrial Classification (SIC)? In what ways might such a classification system be useful? Can you think of any limitations or problems such a system might have over time?
Study smarter with the SolutionInn App