Vioxx Assignment To get started on this homework problem, you should take a look at the Vioxx spreadsheet on Webcampus (Files/Vioxx NPV HW) where the following has already been done: This NPV calculation assumes that today is Dec. 31, 2003 (end of Year 0) and the problem is to calculate the net present value of Vioxx profits to Merck from the end of 2004 (end of year 1) to the end of 2013 (end of Year 10), the date the patent on Vioxx expires. Sales on Vioxx are assumed to be 2.41 billion for the year 2003, and will grow annually at a rate of 2%. The discount rate is assumed to be 5% and that the Gross Margin (Gross Margin = ((Sales-Materials & Expenses)/Sales) on Vioxx is 81%. (See spreadsheet on Webcampus.) Given all these assumptions, the NPV of Vioxx profits from 2004 to 2013 is about $16.6 billion. Now, here is where you start doing some work. Assume that after the Vioxx patent expires in 2013 the sales of Vioxx will drop by 60% initially and then decline annually by $200 million until the drug is ex