Developing bio therapeutic drugs and research technologies

Assignment Help Microeconomics

Reference no: EM13695257

As part of a broad effort to invigorate its pipeline and move more aggressively into biotechnology, a major pharmaceutical company plans to set up a new division dedicated to developing bio therapeutic drugs and research technologies. The company expects to pay $120 million for set up costs of its new division now and $6 million operating costs each year for the next 12 years. The company estimates that the new division will be able to generate annual revenue of $42 million beginning 7 years from now. What is the conventional B-C ratio for this investment if the company's minimum attractive rate of return is 14% per year and the project life is 12 years? Calculate the answer to two decimal places.

Reference no: EM13695257

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