Nancy wants to invest in a pharmaceutical company. What discount rate should she use to compute the present value of her expected cash flows from her investment? She has collected the following data:

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Expected average annual return on 3- month U.S. Treasury bills Expected average annual return on 30 year U.S. Treasury bonds Expected average annual return on other technology and consumer products shares Expected average annual return on other pharmaceutical shares 1.7% 3.4% 8.5% 11.7% Expected average annual return on 3- month U.S. Treasury bills Expected average annual return on 30 year U.S. Treasury bonds Expected average annual return on other technology and consumer products shares Expected average annual return on other pharmaceutical shares 1.7% 3.4% 8.5% 11.7%

Answer rating: 100% (QA)

The individual has invested in the pharmaceutical company and she ... View the full answer