Reference no: EM13831434

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 $195 million to date working on a cure, but is now at a crossroads. It can either abandon its program or invest another $60 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 - 0
Year 2 - 0
Year 3 - 0
Year 4 - 0
Year 5 - $13,100,000
Year 6 - $15,200,000
Year 7 - $16,800,000
Year 8 - $18,300,000
Year 9 - $19,900,000

Find the Net Present Value Rounded to two decimal places