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Consider a pharmaceutical firm that is developing a new drug that it expects will have a significant effect. The firm has anticipated that the cash flows from this drug will begin at t=11 after FDA approval and continue for 15 years. Assume further that the cash flows beginning at t=11 will equal $1,800,000 per year and will remain constant for fifteen years. Assuming that the firm wishes to earn a minimum of 16%, what would be the present value as of today, t=0, of these cash flows?

Reference no: EM131742347

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