Same drug and competition will likely drive profits to zero

Assignment Help Financial Management

Reference no: EM131819261

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 $1 million in its first year and that this amount will grow at a rate of 5% 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 10% per? year?

Reference no: EM131819261

Questions Cloud

Describe the approach the fasb requires for reporting : Identify and describe the approach the FASB requires for reporting changes in accounting principles

How could franklin avoid the internal control weakness : Applying internal control over cash payments by check A purchasing agent for Franklin Office Supplies receives the goods that he purchases.

What is the firm debt-equity ratio : What is the firm's debt-equity ratio?

Which bank control protects against forgery : Understanding bank account controls Answer the following questions about the controls in bank accounts: Which bank control protects against forgery?

Same drug and competition will likely drive profits to zero : 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 jet basis in the land and the machinery : What is George’s basis in his Jet shares? When does his holding period begin? What is Jet’s basis in the land and the machinery?

Prepare safety bank reconciliation using given information : Preparing a bank reconciliation The Cash account of Safety Security Systems reported a balance of $2,450 at December 31, 2016.

Herman need to earn to afford his purchase : What annual interest rate does Herman need to earn to afford his purchase?

How much gain or loss must lucy recognize on the exchange : Transfer to an Existing Corporation. How much gain or loss must Lucy recognize on the exchange?

User Account

All Pages