Question: What would be a good answer to solve this problem? Approximately 14 million Americans are addicted to drugs and alcohol, The federal government estimates that
What would be a good answer to solve this problem?

Approximately 14 million Americans are addicted to drugs and alcohol, The federal government estimates that these addicts cost the U.S. economy $300 billion in medical expenses and lost productivity. Despite the enormous potential market, many biotech companies have shied away from funding research and development (R&D) initiatives to find a cure for drug and alcohol addiction, Your firm - Drug Abuse Sciences (DAS) - is a notable exception, It has spent $160 million to date working on a cure, but is now at a crossroads. It can either abandon its program or invest another $35 million today. Unfortunately, the firm's opportunity cost of funds is 7 percent and it will take another five years before final approval from the Federal Drug Administration is achieved and the product is actually sold Expected (year-end) profits from selling the drug are presented in the accompanying table Year 1| Year 2 |Year. 3 |Year 4 Year 5 Year 6 Year 7 Year B Year 9 $0 50 $0 $13 200 000 516,300,000 $18,000,000 $20.500.000 $21.800.000 What is the net present value of the project? Instruction: Enter your response rounded to the nearest penny (two decimal places]. Use a negative sign (-] where appropriate Should DAS continue with its pian to bring the drug to market, or should it abandon the project? (Click to selectly
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
