Question: please show step by step how you solved this question. You work for a pharmaceutical company that has developed a new drug. The patent on

please show step by step how you solved this question.

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 $5 million in its first year and that this amount will grow at a rate of 4% 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 $ million (Round to three decimal places)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Please show all work and label all inputs, thank you! 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...

please show me how to do this with excel functions 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...

Please give answer in 3 decimal places and show how to input in excel or financial calculator You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17...

just need this one question answered (both pictures are the same just needed to upload a more clear picture THE QUESTION IS: you work for a pharmaceutical company that has developed a new drug. The...

draw the timeline and show how to get answer (Quantitative Question) You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 13 years. You expect that...

(Quantitative Question) You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 13 years. You expect that the drug's profits will be $2 million in its...

draw timeline and provide answer showing work (Quantitative Question) You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 13 years. You expect that...

please help Question 3 (5 points) You work for a pharmaceutical company that received a patent on a new drug a few years ago. The sales last year were $150 million and the marginal cost of producing...

HW Score: 31.25%, 5 of 16 pts 6 of 16 (6 complete) Score: 0 of 1 pt Question Help XP 4-29 (similar to) You work for a pharmaceutical company that has developed a new drug The patent on the drug will...

An intercompany inventory profit is realized when the inventory is sold out-side the entity. Is this also the case with respect to an intercompany profit in a depreciable asset? Explain.

Deercreek Corporation presented two years of data for its Sporting Goods Division and its Camping Division. Required: 1. Compute the ROI and the margin and turnover ratios for each year for the...

what does tax deferred mean when considering a traditional 4 0 1 k

10) For a bond that pays cash interest (i.e., not a zero coupon bond), YTM is (a) always equal to the coupon rate (b) always equal to the current yield (c) is always less than the coupon rate (d) can...

love of humour, often as a device to lighten the occasion;

orderliness, patience and seeing a task through;

well defined status and roles (class distinctions);