What is the present value of the new drug if interest rate

Assignment Help Financial Management
Reference no: EM131456298

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 $ 4 million in its first year and that this amount will grow at a rate of 3 % 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 12 % per? year?

The Present value of the new drugs is $____ Millions

Reference no: EM131456298

Questions Cloud

What are the capital structure weights : ABC Corp. has 10 million shares of common stock outstanding. The common stock currently sells for $65 per share and has a beta of 0.75.
What are the pros and cons of the international sales : CHAPTER CASES&S Air Goes International Mark Sexton and Todd Story, the owners of S&S Air, have been in discussions with an aircraft dealer in Europe.
How long must you wait from now to earn that amount : You expect to receive $5171 at graduation in two years. How long must you wait from now to earn that amount?
Define the capital structure : Suppose a firm has a capital structure exclusively comprising of ordinary shares amounting to Rs. 1000000. The firm now wishes to raise additional Rs. 1000000.
What is the present value of the new drug if interest rate : You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. What is the present value of the new drug if the
Identical firms in all respects except for capital structure : ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. Calculate his total cash flow and rate of return.
Prepare a title page and review : Prepare a brief review of the reading in a section titled Introduction. This should include the important points to be highlighted in the following sections.
Treasury securities-calculate yield using geometric average : Calculate the yield using a geometric average.
Complete the cash budget spreadsheet : 311.530 And 311.538 ACCOUNTING PRACTICES ACCOUNTING PRACTICES ASSIGNMENT. Complete the cash budget spreadsheet and submit

Reviews

Write a Review

Financial Management Questions & Answers

  What is the cost of equity for the firm

The common stock of DUC has a beta of 1.65. The market rate of return is 13.2% and the risk-free rate is 4.8%. What is the cost of equity for the firm?

  What is the expected gain-loss from the forward hedging

General Electric sold jet engines on credit to Air France and invoiced €10 million payable in six months. Currently, the six-month forward exchange rate is $1.25/€ and the foreign exchange advisor for General Electric predicts that the spot rate is l..

  Calculate NPV-Payback-Discounted Payback and Modified IRR

Calculate NPV, Payback, Discounted Payback, IRR and Modified IRR for the following project

  Firm needs to plow back its earnings to fuel growth

Solinux, Inc., is a young start-up company and will not pay dividends on its stock for the next 8 years, since the firm needs to plow back its earnings to fuel growth. The company will then pay a $1.35 per share dividend in year 9 and will increase t..

  What is the maximum you can afford to spend on the car

You are considering buying a car, and want to take out a loan to help you pay for it. You have $3,000 saved to use as a down payment. Your budget allows you to afford a $300 per month loan payment. You can qualify for a 5% interest rate, and the maxi..

  Estimate the libor zero rates for maturities

The LIBOR zero curve is flat at 4% (continuously compounded) out to 2 years. Swap rates for 3- and 4-year annual pay swaps are 4.5% and 5%, respectively. Estimate the LIBOR zero rates for maturities of 3 and 4 years. Give your answers as annual rates..

  Two projects for inclusion in its capital budget

Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating workin..

  By how much would the bonds price change

A $1,000 par value bond with seven years left to maturity pays an interest payment semiannually with a 6 percent coupon rate and is priced to have a 5.5 percent yield to maturity. If interest rates surprisingly increase by 0.5 percent, by how much wo..

  The amount left for distribution to general unsecured credit

Three general unsecured creditors are owed $45,000 as follows: Easy Does It Rentals, $15,000; Make Me a Deal Furniture, $5,000; and TV’s r Us, $25,000. After all other creditors are paid, the amount left for distribution to general unsecured creditor..

  Some reasons why the interest rate would change

Can you think of some reasons why the interest rate would change? Or better yet, pretend both you and I are going to the same bank today and both want to borrow 10k. Say that I have lousy credit and you have excellent credit. How can a bank play with..

  How might both parties gain from a lease transaction

Is leasing a zero-sum game in the sense that any gain to the lessee is a cost to the lessor?If not, how might both parties gain from a lease transaction? In your answer, explain how the lessee and the lessor analyze the situation, why they might use ..

  What are the portfolio weights of each stock

If you own 450 shares of Alaska Air at $62.08, 500 shares of Best Buy at $70.52, and 300 shares of Ford Motor at $9.31, what are the portfolio weights of each stock?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd