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johnpaech johnpaech
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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:
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deusmarotodeusmaroto
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6 years ago
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johnpaech Author
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#2
5 years ago
Thanks for helping with my corporate finance course
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#3
3 years ago
ty
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