Top Posters
Since Sunday
5
o
5
4
m
4
b
4
x
4
a
4
l
4
t
4
S
4
m
3
s
3
New Topic  
johnpaech johnpaech
wrote...
Posts: 1098
Rep: 7 0
6 years ago
You work for a pharmaceutical company that has developed a new drug.  The patent on the drug will last for 17 years.  You expect that the drug will produce cash flows of $10 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 generic equivalents of your drug and competition will drive any future profits to zero.  If the interest rate is 12% per year, then the present value of producing this drug is closest to:
A) $71 million
B) $90 million
C) $170 million
D) $105 million
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
Read 107 times
3 Replies
Replies
Answer verified by a subject expert
deusmarotodeusmaroto
wrote...
Posts: 429
Rep: 6 0
6 years ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

johnpaech Author
wrote...
5 years ago
Thanks for helping with my corporate finance course
wrote...
3 years ago
ty
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  766 People Browsing
 112 Signed Up Today
Related Images
  
 359
  
 387
  
 380
Your Opinion
How often do you eat-out per week?
Votes: 79